2017 is rapidly coming to a close. Thanksgiving is around the corner, and just as the busy holiday season can quickly sneak up on us, so can year-end retirement account deadlines. Missing these deadlines can be costly – possibly resulting in stiff penalties or the loss of valuable tax breaks.
Here are five key year-end retirement account deadlines to consider:
1. Take the 2017 Required Minimum Distribution (RMD) from both your IRAs or inherited IRAs.
Traditional IRA owners, including SEP and SIMPLE IRA, who reached age 70½ prior to 2017 must take their Required Minimum Distribution by December 31, 2017. If you turned 70½ during 2017 you get a little bit of a break the first year and you have until April 1, 2018 to take your first RMD. Generally, these deadlines also apply to company plan participants unless you are working for a company and own less than 5% of that company, then your RMD will be delayed until April 1st of the year following the year of retirement.
2. Complete your 2017 Roth Conversions.
If you are considering converting an IRA to a Roth IRA in 2017, time is quickly running out. There is a common misconception that the conversion can be done up until your tax filing deadline. This is not the case. The deadline for a 2017 conversion is the end of the calendar year. There is no such thing as a prior year conversion. The distribution must be taken in 2017 and reported on a 1099R. It’s best not to wait until the last minute. IRA custodians will need time to process the distribution, so waiting until the final days can be risky. Make sure to get the transaction done before the end of the year.
3. Make your qualified charitable donations (QCD).
Are you charitably inclined? You may be considering donating to a charity to get a 2017 tax break. A 2017 QCD must be completed by December 31st, 2017. This is another transaction that you want to make sure that the custodian has the proper time to process. They must transfer the funds directly from the IRA owner to the charity and report the transaction.
4. Understand which 2017 tax year deadlines for retirement accounts fall in the year 2018 and mark them on your calendar.
5. Plan on doing reviews of tax form 1099-R and check-ups of forms 5329 in January, 2018.
How many of these had you already planned on accomplishing in 2017? If the answer is less than 5 make sure to go over your accounts, donations and other applicable assets or to check in with your financial advisor to ensure these deadlines don’t pass you by. It will ultimately mean more money in your pocket for 2018, and the years to follow.
About the Author: Financial adviser, retirement wealth strategist, co-founder of Strategy Financial Group and author of “Climbing the Retirement Mountain,” Calvin Goetz is an Investment Adviser Representative who holds the Series 65 securities license, is life and health insurance licensed in the state of Arizona and is a member of Ed Slott’s Elite IRA Advisor Group™ and the National Association of Insurance and Financial Advisors (NAIFA). For more information, visit StrategyFinancialGroup.com.