Retirement Contributions Year-End Financial Deadlines

Just because you have a retirement account means you’re all set, right? Not exactly.

A retirement account – like anything to do with finances – needs to be maintained and will need a lot of upkeep. As the year draws to a close, we have provided a checklist of retirement deadlines that you should have met. If you haven’t met these yet, give us a call. A trusted financial adviser is essential to helping you prepare a strong financial plan for retirement.

Take a look at this list to see if you’re on track with meeting important retirement deadlines.

IRA Contribution.

April 18, 2016 is the deadline to contribute up to $5,500 to an IRA account and to have this contribution applied to the 2015 tax year. If you are 50 or over, you may be eligible to contribute an additional $1,000 to an IRA.

Pension Distributions.

As for distributions: required minimum distributions for those who have reached retirement age are always due by December 31st. Should you miss this deadline, you will be taxed 50{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of the amount that you should have distributed.

This deadline is EXTREMELY important for retirees, so make sure you aren’t missing this one.  

If you might have missed the deadline, you have until April 1st of the year after you turn 70 ½ to take your first minimum distribution. After that, you must adhere to the December 31st deadline. Even though you’re given a bit of leeway for your first withdrawal, you might still want to adhere to the deadline, otherwise you may have to make two required withdrawals in one year, which will cost you more in taxes.

401(k) Contribution.

Your 401(k) contribution deadline is also something to consider. These contributions are due by the end of the year. If you’ve neglected your contributions and are an employee over the age of 50, you may be eligible to make a catch up contribution of up to $6,000. Keep in mind: this is also due by December 31st.

Signing Up For Social Security.

If you are eligible for Social Security, you can sign up at the age of 62, but your payments will be reduced. At retirement age of 66 – you must have been born between 1943 and 1954 – your payments will be reduced by 25{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439}. If your retirement age is 67 – then,  your birthday is between 1955 and 1959 – your benefit will be reduced by 30{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} monthly.

Delayed Retirement.

If you delay your Social Security claims, you can accrued delayed retirement credits. These delayed retirement credits will increase your Social Security by roughly 8{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} annually. However, there is no increase in benefits received if you delay past the age of 70. So, by all means, hold off as long as you can before claiming Social Security, but know that there are no benefits for delaying past the age of 70. If you need your Social Security by this age, claim it.

Medicare Sign Up.

Medicare parts D and B can be signed up for during a seven-month window. This window begins three month before you turn 65 years old. Medigap, or the extra health insurance you purchase to cover anything not covered by Medicare, has a different enrollment period. This enrollment period covers 6 months that begins when you are 65 or older and are already enrolled in Medicare B. If you miss these windows, it could mean spending more money on higher premiums.

Changes to Medicare Plan.

Between October 15th and December 7th each year, those enrolled in Medicare can make changes to their prescription drug coverage. During this period, be sure to check that the medications you use can be covered by out-of-pocket funds. If not, then you should switch your coverage plans.

Finding a Financial Adviser.

Our general rule of thumb is the sooner you find a trusted financial adviser, the better off you will be. A trusted financial adviser can not only help you prepare for the above deadlines, but can make sure that your retirement account is on-track and that your budget is working for you – both now and in your later years.