Tax-Return Funded IRAs One is now permitted to take their tax refund by three methods under the Pension Protection Act of 2006.The first two, as a check or a direct deposit into a savings or checking account are available.

The Pension Protection Act of 2006 adds a third option: direct deposit into an IRA.

If one chooses to, they can split their return into three accounts as opposed to just one, as it was in the past. So instead of a check or a direct deposit into a savings or checking account, one can fund their IRA.

While one can put their refund into an IRA, it doesn’t change the fundamental IRA rules. Contribution in 2006 have to be done before April 15th, 2007. If one chooses their tax refund contribution to count toward 2006 then they have to file their return early enough so that the refund gets back before April 15th.

To split one’s refund’s direct deposit into multiple accounts, fill out Form 8888 and indicate where the funds will go. Any U.S. financial institution with valid routing and account numbers qualify.

One is now permitted to take their tax refund by three methods under the Pension Protection Act of 2006. The first two, as a check or a direct deposit into a savings or checking account are available.