Maximize Your Savings Potential: Top Strategies to Secure Retirement Benefits

The end of the year is fast approaching, and with it comes a number of critical deadlines for retirement planning. By staying on top of these tasks, you can avoid costly penalties, maximize your tax benefits, and ensure your financial goals remain on track. In this guide, we’ll cover the most important deadlines and strategies for 2024 to help you navigate year-end retirement planning. 

Key Deadlines to Keep in Mind 

• 401(k): Contributions must be made by December 31, 2024.

• IRA and SEP IRA: Contributions can be made until April 15, 2025 (or October 15 if you file an extension). 

• Solo 401(k): Employee contributions are due by December 31, 2024, but employer contributions can be made up until the business tax filing deadline. 

Contributions to your 401(k) can be a game-changer for your retirement savings and can save you money on your 2024 tax return. Keep in mind that deposits to your 401(k) plan are typically due by the end of the calendar year. 

The 401(k) contribution limit for 2024 is $23,000, with an additional $7,500 allowed for catch-up contributions for those aged 50 and older. This allows employees to maximize their retirement income and plan better for the future. 

2. Take Required Minimum Distributions (RMDs): 

• Retirees aged 73 and older must take RMDs by December 31, 2024, to avoid penalty.
• First-time RMD takers turning 73 in 2024 have until April 1, 2025, but taking two distributions in one year could increase your tax liability. 

For retirees with 401(k) plans and traditional IRAs, RMDs must be taken by December 31 each year after reaching age 73, starting in 2023. Missing an RMD incurs a 25% penalty on the required amount, plus regular income tax. If corrected within two years, the excise tax drops to 10%. 

You gain extra time for your initial required minimum distribution if you're turning 73 in 2024. In this case, you have until April 1, 2025, to take your first distribution. However, from then on, your required minimum distributions must be completed by December 31 each year. If you delay your first distribution until April, you'll end up taking two distributions in the same year, potentially leading to a higher-than-usual tax bill. 

• Convert a traditional IRA to a Roth by December 31 to benefit from tax-free withdrawals in retirement.
  

• Donations to qualified charities must be completed by December 31, 2024, to qualify for deductions. 

If you're 70 ½ or older and don't need your IRA distributions, consider donating up to $105,000 to charity tax-free each year.

5. Take More Time for IRA Contributions:

While 401(k) contributions are generally due by the end of the calendar year, you have until your tax filing deadline in April 2025 to make an IRA contribution that qualifies for a 2024 tax deduction. Contribute shortly before filing your taxes to get an almost immediate reduction in your tax bill. If you wait until 2025, be sure to indicate that the funds are for 2024. 

Plan Ahead to Avoid Financial Setbacks 

Adhering to these deadlines is crucial for maximizing the benefits of retirement accounts and minimizing penalties. Missing even one deadline can lead to significant financial setbacks. Take control of your retirement planning today by contacting our team at (239) 298-8210 or visiting us online at rmcgp.com.