Important Dates and Deadlines

Critical Financial Time Frames and Deadlines

You Need to Know!

There are many deadlines in life of which we need to be aware: driver license renewal, passports, due dates for bills and loans. But your financial life also has many critical deadlines and missing some of them could cost you money. Here is a list of important retirement, tax and Social Security deadlines.

Deadlines for Taxes and

Retirement Accounts

Your Required Minimum Distribution (RMD): December 31st

Typically, once you reach age 73 (or 75 if you were born in 1960 or later), you must begin taking annual RMDs from all tax-deferred retirement accounts. from your traditional IRAs each year by December 31. Your RMD is the minimum amount you must withdraw from your retirement account each year when you reach a mandated age. There is an IRS formula for calculating your RMD. I can help you determine the correct amount, so please call me.
Required beginning date for your first RMDIRAs (including SEPs and SIMPLE IRAs) is April 1 of the year following the calendar year in which you reach age 73. For 401(k), profit-sharing, 403(b), or other defined contribution plans the date is generally April 1 following the later of the calendar year in which you reach age 73, or when you retire (if your plan allows you to delay taking your RMD until retirement)

Your Retirement Contributions Deadlines

December 31 If your plan is employer sponsored, make sure you have contributed enough to take advantage of matching contributions. You have until December 31 to make any additional 401(k) contributions including catch-up if you are 50 or older. NOTE: The limits may change from year to year.

April 15 is the deadline or IRA contributions and catch up contributions if you are 50 or older.

Harvest Tax Losses: December 31st

This is a strategy of realizing investment losses in order to offset capital gains. Call me to see if this strategy is appropriate for you before December 31st.

Three Important Age Deadlines for Retirement Planning

In planning for retirement, the important word is "planning". That planning includes knowing certain critical and specific age markers that can keep you from making expensive mistakes. Here are three of the most important of which you need to be aware. Each of these milestones have certain things you need to know and each have ramifications if you miss them.

1. Age 59 & 1/2 and your 401(k):

Once you reach age 59 & 1/2, you may withdraw money from your 401(k) penalty-free. If you tap into it beforehand, you may face a 10% penalty tax on the withdrawal in addition to income tax that you’d owe on any type of withdrawal from a traditional 401(k).

Remember, regardless of your age, any withdrawal you make from a traditional 401(k) is subject to income tax at your own rate.

2. Age 65 and Medicare - avoid the lifetime penalties.

When enrolling in Medicare timing is everything. What most people don’t realize is that there are critical time frames when enrolling in Medicare. If you miss certain deadlines you face penalties and possible medical coverage gaps. If you are in the year you will turn 65, there are important deadlines you need to know.

Initial Medicare Enrollment Period:

This period starts 3 months before you turn 65 and ends 3 months after you turn 65. This is when you need to sign up for Medicare online or contact Social Security. To get the most from Medicare and avoid Part B late enrollment penalties this is the time frame in which you must enroll.
Penalties: If you miss the enrollment time period there is a LIFETIME penalty which is added to your monthly Part B premium and the premium increases the longer you wait.

3. Social Security Benefits:

The earliest age you can begin taking your Social Security benefit is age 62. You can defer your benefit until age 70.
Remember, the earlier you take your benefit, the less you receive monthly. Deferring until age 70 maximizes your benefit. There are many reasons to both take early benefits and to defer. The choice is highly specific to each individual. Please call me to help you decide what is best for your situation.

Other Important to-do's

Check Your Flexible Spending Account (FSA) Balances before the end of the year:

With an FSA you need to spend all of the money you have deposited into your employer’s FSA. You have 14.5 months to spend down your account balance. If there is money left by December 31, you can “carry over” up to $570 into the next year.

Review Your Credit Report: Once a Year:

Each of the major credit bureaus allow you one free audit each year. It is wise to do this because mistakes can be may that affect your credit rating.

These time frames are important and easy to miss. Call me if you are reaching any of these critical ages.

Sources:

https://finance.yahoo.com/news/401-k-withdrawal-age-early-154939245.html

https://www.aarp.org/money/taxes/info-2020/required-minimum-distribution-rules.html

https://www.schwab.com/learn/story/required-minimum-distributions-what-you-should-know

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds