Timely Reminders
With year-end quickly approaching, the usual deadlines come to mind:
- 529 contributions need to be in by December 31 to qualify for the state tax benefits that may attend them. We recommend getting these submitted well before year end.
- The IRS requires that folks over 70.5 take required minimum distributions (RMD) from traditional IRAs. The penalty for missing an RMD if 50% of the distribution, so don’t miss an RMD. Also, if your 70th birthday falls between July 1 and December 31, 2016, you might be tempted to postpone your first distribution until the year in which you turn 70.5; i.e. 2016. If you do, however, you will be required to also take a distribution when you turn 71, meaning you’ll have to take two distributions in one year, which may make for an unpleasant tax bill. Consult your tax professional for planning assistance.
- Conversions from Traditional to Roth IRAs must be completed by December 31.
It never hurts to beat the rush by getting this done earlier in the fourth quarter.