Upcoming Deadlines for Retirement Investments

Your retirement investments have deadlines.

Your retirement investment portfolio should go beyond Social Security. Do you know what your deadlines for this year are? (Photo Credit: 401(K) 2012/Flickr)

If you have a retirement investment portfolio that contains one or more individual retirement arrangements (also known as individual retirement accounts or IRAs), a 401(k), and perhaps a Roth IRA, there are key dates for you to be aware of in the upcoming months. IRAs, in particular, have several deadlines that might be easily missed.

While there are some cases where a missed deadline can be fixed, doing so usually costs a great deal of time and money.

The Run Down

  • For anyone who has inherited an IRA from someone who passed in 2001, you have until September 30 to cash out.
  • SEP IRAs must be established by the employer’s tax filing deadline (plus extensions) for the tax year to which the qualifying contribution(s) will apply.
  • SIMPLE IRAs must be established by October 1st.
  • October 15th is the last date for re-characterizing a Roth IRA conversion.
  • For 2011 small business retirement plan contributions, checks must be postmarked by October 15, 2012.
  • Individual 401(k) and Roth Individual 401(k) accounts must be established by December 31st as well as profit sharing/money purchase accounts.

Sunday, September 30, 2012

For those who are inheriting an IRA from someone who passed away in 2011, this date will be of importance. September 30, 2012 is the last day to pay off — or cash out — a beneficiary of an account so that you will not be considered when calculating required minimum distributions or required minimum distributions (RMDs) from an inherited IRA.

Note: For those older beneficiaries who are not removed by the September 30, 2012 date, segregating their share into separate accounts by December 31, 2012 will still allow younger beneficiaries to use their own life expectancies, so long as there is no non-person beneficiary (an estate, charity, et cetera) remaining after September 30th.

Monday, October 1, 2012

If you have a SIMPLE IRA — which stands for a Savings Incentive Match Plan for Employees Individual Retirement Account — October is a critical month. Most types of employer-sponsored plans can be set up at any time during the year, but an employer must typically establish a SIMPLE IRA by no later than October 1st.

“The second notice required, at least 60 days before start of new year, is for the employer to notify all eligible employees of the employer’s contribution for the coming year — a 3 percent match, 2 percent ‘non-elective,’ or — potentially — a reduced match,” Ben Norquist, the president and CEO of Convergent Retirement Plan Solutions recently told MarketWatch.

Monday, October 15, 2012

For those of you who have done a Roth IRA conversion, October 15, 2012 is the last date for re-characterizing a 2011 Roth conversion.

Re-characterization is when a contribution is treated as though it is being made to another type of IRA instead of the IRA to which the contribution was initially made. If you converted an amount from another retirement account to a Roth IRA during 2011, and you would like to reverse or re-characterize that conversion, you have until your 2011 tax filing deadline to do so.

October 15th is also the deadline to remove 2011 IRA excess contributions. If you contributed more than is allowed to your IRA for 2011, you will owe the IRS an excise tax of 6 percent of the excess amount, unless you correct it by your 2011 tax filing deadline. Much like the deadline for completing re-characterizations of Roth conversions, if you filed your 2011 tax return or filed for an extension by the due date (which Monday, April 15, 2013), you receive an automatic six-month extension to correct the excess IRA contribution.

Monday, December 31, 2012

The required minimum distribution (RMD) deadline for those over age 70½ is December 31, 2012. This is the same date for IRA beneficiaries of deceased IRA holders.

For those who are concerned about whether or not Congress will allow the tax rates set in 2001 and 2003 to expire at the end of the year, December 31st is also the last date for making a Roth conversion that would be includable in 2012 taxable income.

For those who have a solo 401(k) or what’s also called an individual(k), the employer must establish the plan by no later than last day of business’s 2012 tax year to be eligible to make deductible contributions for 2012. If you are self-employed and have a simplified employee pension (SEP) IRA, this can be established all the way up until your business’ tax return due date, including extensions.

The Takeaway

With the multiple investment options available, it can be difficult to keep track of deadlines and filing dates. Adding to the complication is knowing what you can file for, what you can cash out on, and what you could re-characterize. This is where AmOne can help. Our experienced associates are ready to answer your questions on investing, retirement, financial planning, and more. AmOne offers solutions; your call to us is free and we won’t try to sell you anything. Find out how to reach us and learn more about how AmOne can help you today.

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