Important Retirement Deadlines

Important Retirement Deadlines

It’s almost time to throw away that 2013 calendar. As you put birthdays, anniversaries and other important dates on your new calendar, you might want to include reminders about certain retirement deadlines throughout the year.

Dec. 31, 2013 – Before the final rush of the holiday season, note that contributions to 401(k) and 403(b) qualified retirement plans must be deposited by this date to qualify for a 2013 tax break. In addition, retirees over age 70 ½ must take their required minimum distribution from pre-tax IRAs and 401(k)s before the end of the year. Failing to take the correct amount could result in a 50 percent tax penalty plus the payment of regular income tax on the amount. One more deadline specifically for 2013 – if you plan to convert a pre-tax IRA or traditional 401(k) to a Roth 401(k) in the current tax year, you must initiate that conversion by Dec. 31.

April 1, 2014 – Those who turned 70 ½ in 2013 can delay their first required minimum distribution until April 1, 2014. Delaying the distribution, however, means two required distributions in 2014 – the 2013 withdrawal before April 1 and the 2014 withdrawal by Dec. 31.

April 15, 2014 – Your tax return is due, of course, unless you file for an extension. In addition, this is the last day to make IRA contributions for the 2013 tax year. If you make a contribution between Jan. 1 and April 15, 2014, make sure you note on your check which tax year it should be credited toward – otherwise, the financial institution will assume the current year (2014).

Are you turning 65 in 2014? If so, you can sign up for Medicare as early as three months before your 65th birthday if you want coverage to begin the month you turn 65. If you delay enrollment, your Medicare Part B and D premiums could permanently increase or you could be denied supplemental coverage all together, so mark your calendar for three months prior to your 65th birthday.

A financial advisor will help you stay on top of these deadlines, and can work with your accountant to execute any investment actions related to your tax strategy. Call your financial advisors office if you have questions or to schedule a joint appointment with your tax advisor.

FINANCIAL FACTS

Missed Out – The median household income in the U.S. increased 124 percent (adjusted for inflation) over the 23 years from 1984-2007, an annual increase of 3.6 percent per year. From 2007-2012, our nation’s median household income increased only 1.6 percent over the five years, an annual increase of just 0.3 percent (source: Census Bureau, BTN Research). 

One Trillion Gain – From Dec. 31, 2012, to Nov. 30, 2013, the Federal Reserve has grown its balance sheet (through “quantitative easing”) from $3 trillion to $3.9 trillion, an increase of $900 billion (source: Federal Reserve, BTN Research).   

Penalty – Everyone not covered by Medicare, Medicaid, an individually purchased private plan or a plan available through one’s employer must enroll in a health insurance plan though an Affordable Care Act state/federal exchange or pay a 2014 penalty of “the greater of” $95 or 1 percent of income. The penalty increases in subsequent years. The 2016 fine is “the greater of” $695 or 2.5 percent of income (source: Affordable Care Act, BTN Research).