Don't Forget These IRA, 401(k) Planning Tasks Before Year-End

What You Need to Know

Many important financial matters must be accomplished for 2023 by Dec. 31.
Paramount are IRA contributions and transactions involving company-sponsored retirement plans.

With the holiday season now in full swing, now is an ideal time for clients to be reminded about year-end retirement planning items. 

Many important items must be accomplished for 2023 by Dec. 31 — and, as we move into December, time inevitably seems to move faster. With the Thanksgiving rush in the rear view, clients should take the opportunity to get a jumpstart on end-of-year retirement to-do items — both with respect to IRA transactions and transactions involving company-sponsored retirement plans.

Many of these year-end issues are fairly basic, so it’s easy to overlook them during the busy holiday season. The objective is to help clients get their ducks in a row when it comes to year-end retirement planning.

Year-End IRA Planning Items

Most clients are aware that contributions to traditional IRAs can be made up until their tax filing deadline for the tax year. That typically is April 15 of the following calendar year. However, for most other IRA-related transactions, Dec. 31 is the relevant deadline.

Of course, clients subject to the required minimum distribution rules must take their RMD by Dec. 31. Taxpayers born on or before June 30, 1949, are subject to the original, pre-Secure Act rules. Those clients should have already begun taking distributions from retirement accounts in the year after they turned 70.5.

Clients born after June 30, 1949, but before Jan. 1, 1951, are subject to the age-72 rule under the original Secure Act. Clients born on or after Jan. 1, 1951, are subject to Secure Act 2.0’s age-73 rule. 

The deadline for making qualified charitable distributions is also Dec. 31. Charitably minded clients can direct up to $100,000 in IRA funds per year to charity. That donation is not included in the taxpayer’s income and, if conditions are satisfied, the donation counts toward the taxpayer’s annual RMD. The $100,000 cap is a per-person cap, so married taxpayers can direct up to $200,000 to charity each year so long as each spouse has an IRA.