Key Retirement Deadlines Approaching on December 31

Many people preparing for retirement feel uncertain about important end-of-year deadlines. Understanding these timelines can bring some peace of mind and help avoid unwanted surprises.

Let’s look at three specific retirement tasks that have a firm cutoff at the end of December. These deadlines remain the same each year, setting a clear date to keep in mind: December 31.

IRA Contributions – What to Know It’s easy to assume that all retirement plan contributions are due at year’s end. Actually, Traditional and Roth IRA contributions are exceptions,they can be made up until the tax filing deadline in April of the next year. However, contributions for most other retirement accounts follow a stricter calendar deadline.

401(k) and 403(b) Contributions For those with 401(k), 403(b), or similar employer-sponsored retirement plans, the deadline to make employee deferral contributions is December 31. This means that any salary deferrals must be processed by this date to count toward the current tax year. Employer contributions may operate on a different schedule, but personal salary deferrals are tied to the December 31 cutoff.

Roth Conversions If considering moving funds from a Traditional IRA to a Roth IRA, this process,called a “Roth conversion”,also has a December 31 deadline. Only funds converted by this date will be included in this year’s taxable income. Waiting until January pushes the conversion into the following year for tax purposes. This timing can be particularly important for those doing year-end tax planning or managing their taxable income.

Required Minimum Distributions (RMDs) People who are 73 and older (as of recent rule changes) must keep track of their Required Minimum Distributions, or RMDs. The rule says annual RMDs must be withdrawn by December 31 each year, beginning with the year after turning the qualifying age. Missing this deadline can lead to penalties equal to a significant portion of the required withdrawal.

A few exceptions apply. Those taking their very first RMD after reaching the required age can delay the initial distribution to as late as April 1 of the following year. All other annual RMDs, though, must be taken by December 31.

Staying on Track Facing several retirement deadlines all at once can feel overwhelming. Focusing on these three main areas,401(k)/403(b) contributions, Roth conversions, and RMDs,helps clarify priorities as the year draws to a close.

Remember, understanding when these deadlines apply can make organizing year-end finances smoother. While each person’s situation is different, keeping December 31 firmly in mind for these retirement moves can bring a sense of structure and confidence to the process.