By Suzanne Kubota
Senior Internet Editor
FederalNewsRadio.com

If you haven’t made your 2010 contribution to your Roth IRA, there’s still time left.

In fact, you have three extra days to get it done!

Usually, contributions must be in by April 15th, but this year, April 15th is a Friday and a holiday in the District of Columbia (Emancipation Day.) The deadline to make your 2010 IRA contribution this year is April 18, 2011. One quick tip/caution: remember to tell your IRA custodian that you are making a contribution for the 2010 tax year.

Ed Zurndorfer, registered employee benefit consultant, told Federal News Radio there’s no penalty for putting off contributions until the last minute, but you “lose the potential for growth.”

He explained that an individual can contribute as much as $5,000 for 2010 to a Roth IRA or $6,000 if the individual was 50 or older as of Dec. 31, 2010.

He further explained that the contributions have already been taxed. Any earnings on the account will never be taxed provided the distribution is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for the Roth IRA owner’s benefit and the distribution is made: (1) on or after the date the owner reaches age 59.5; or (2) because the Roth IRA owner is disabled; or (3) to a beneficiary or to the Roth IRA owner’s estate after the owner’s death; or (4) because the distribution meets the requirements listed under “first home expenses” (up to a $10,000 lifetime limit) as per under exceptions in chapter 1, IRS Publication 590 page 65.

Under these circumstances “everything coming out of a Roth IRA doesn’t even show up on one’s tax return,” said Zurndorfer.

When struggling with the decision whether to go for a traditional IRA or a Roth IRA, said Zurndorfer, “my feeling is that tax rates are only headed one way: UP!” Congress will raise tax rates “which means those people who have Roth accounts will really benefit by paying the tax now at a lower rate compared to paying tax at a higher rate in the future.”

Zurndorfer said everyone should have a Roth IRA “because I expect everybody to be paying higher taxes in the future,” especially younger people who can get up to 60 years of tax free growth on their investments.

Plus, he said, you are not required to take the money out at age 70 and a half, unlike the TSP. “With the Roth IRA, you NEVER have to take money out of it.” This feature, he added, makes it a good “wealth transfer device” because your heirs won’t have to pay taxes either.

One caveat: there’s no guarantee. “The value of your IRA is going to be subject to market conditions,” he said. Be prepared to keep the money in there “for at least 15, 20 or more years because that will give you the most bang for the buck here.”

And federal employees should take special note: if you have been unable to contribute in 2010 because of income limitations “there’s good news down the line because starting next January the Thrift Savings Plan is going to offer a new option to federal employees. It’s called the Roth TSP.” Zurndorfer said the new plan works the same way as a Roth IRA in that after-tax dollars go in and untaxed funds come out “and there will be NO income limitations for contributing to the Roth TSP.”

So you’ve got that to look forward to.

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