As investors review their investments in the coming weeks, retirement planning is a priority, especially those strategies that involve year-end deadlines.
Chris Hennessey identifies several areas that require action before December 31.
- Retirees age 70½ or older must take required minimum distributions (RMDs) from individual retirement accounts or 401(k) plans by December 31. The Internal Revenue Service imposes penalties if investors fail to take the RMDs or miscalculate withdrawals. Checking with an advisor can help.
- If investors choose a Roth IRA conversion for the 2014 tax year, the deadline is December 31. Those in lower income brackets may want to take advantage of this strategy. Even with the deadline, it’s important to note that a Roth conversion can be reversed — or recharacterized — by October 15, 2015.
- The year’s final quarter is an opportune time to conduct an overall review of retirement accounts and savings strategies. Advisors can help investors examine their asset allocation and savings strategies, and determine if investments need rebalancing.