IRA Deadlines Are Approaching
March 10th, 2023 | Investments, Retirement, Tax, Work to Wealth
Our featured article of the month, IRA Deadlines are Approaching, provides the necessary deadlines for meeting such items as current and prior year IRA contributions, Required Minimum Distributions (RMD)s and some tips on not getting your contributions confused for either past or current year.
RMDS must be taken by the last day of the calendar year in which they are due. While the penalties for not taking them have been reduced, they still result in the loss of some of your money. I typically suggest that if you are using your RMDs for living expenses throughout the year, to take them on a monthly basis by having them directly deposited into your bank account.
For those who do not use them throughout the year, I explain that we process them in the office annually on December 15. We want to ensure that they are processed prior to the deadline and prior to the holiday season. Also, any issues with the distributions could be handled on a priority case prior to year end.
As for IRA contributions, prior year contributions can be deposited any time prior to the tax deadline for 2022 returns, which this year is April 18, 2023. You have until the same time frame next year for 2023 deposits. Of course current year contributions can be deposited at anytime starting January 1, 2023. However, for either instance, see the notes in the article about specifying which year the contribution represents in order for it to be processed and recorded properly.
Here is what you need to know.
Financially, many of us associate the spring with taxes – but we should also associate December with important Individual Retirement Account (IRA) deadlines. This year, like 2022, will see a few changes and distinctions.
Remember, this article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals for the most up-to-date information about IRA account deadlines and contribution strategies.
December 31, 2023, is the deadline to take your Required Minimum Distribution (RMD) from certain IRAs.
April 18, 2023, is the deadline for making 2022 annual contributions to a traditional IRA, Roth IRA, and certain other retirement accounts. April 15 falls on a Saturday, so the deadline has been extended.1
Some people may not realize when they can make their IRA contribution. You can make a yearly IRA contribution between January 1 of the current year and April 15 of the next year. Accordingly, you can make your IRA contribution for 2023 any time from January 1, 2023, to April 15, 2024.1
A person can open or contribute to a Traditional IRA past age 72 as long as they have taxable income.
If you are making a 2023 IRA contribution in early 2024, you must tell the investment company hosting the IRA account for which year you are contributing. If you fail to indicate the tax year that the contribution applies to, the custodian firm may make a default assumption that the contribution is for the current year (and note exactly that to the I.R.S.).
So, write “2024 IRA contribution” or “2023 IRA contribution,” as applicable, in the memo area of your check, plainly and simply. Be sure to write your account number on the check. If you make your contribution electronically, double-check that these details are communicated.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1. irs.gov, October 26, 2022