The start of a new year—and a new decade, to boot—is a great time to assess your financial situation and look ahead. You’ll want to consider moves for the long term, but it’s also critical to pay attention to the details in the short term so you don’t miss an important deadline. This calendar highlights significant dates pertinent to preretirees and retirees, giving you a jump-start on getting organized. May the coming year and decade prove fruitful for your finances.
January 1. Once you’ve recovered from your New Year festivities, it’s time to get down to brass tacks. After all, it’s the start of a new tax year. As you gather up documents to prepare for filing your 2019 tax return, look for moves to trim your 2020 tax tab.
Those still working can stash more into their 401(k)s for 2020. Workers can put up to $19,500 into their employer plan, which is $500 more than last year. Turn 50 or older anytime in the calendar year, and your maximum contribution jumps to $26,000.
Also consider whether to stash money in a traditional or Roth IRA, or a combination of both. The maximum total IRA contribution for 2020 is $6,000, plus an extra $1,000 if you are 50 or older. Keep in mind that once you turn 70½, you can no longer contribute to a traditional IRA, but you can contribute to a Roth IRA if you’re still working. If you have retired but your spouse hasn’t, the working spouse can make the maximum contribution to a spousal IRA for you, as long as the worker’s earnings cover the contribution and his or her own IRA contribution.
This is also the start date for Medicare’s general enrollment period, which runs until March 31, with coverage starting July 1. Those who missed signing up for Medicare at age 65 and don’t qualify for a “special enrollment period” (for people who had group coverage beyond age 65) can enroll in Parts A and B during this period. In this same time frame, Medicare Advantage beneficiaries can switch to a different Advantage plan or to traditional Medicare.
January 15. This is the deadline for the fourth quarter estimated tax payment for 2019 taxes. You can skip this deadline if you file your 2019 taxes by January 31 and pay the remaining balance at that point.
March 31. Traditional Medicare general enrollment and Medicare Advantage open enrollment periods end.
April 1. If you turned 70½ in 2019, this is the deadline for taking your first required minimum distribution from your tax-deferred retirement accounts. All subsequent RMDs must be taken by December 31.
To calculate a first RMD due by April 1, 2020, take the 2018 year-end account balance and divide it by a life expectancy factor based on your birthday in 2019. Find the factor in IRS Publication 590-B. Remember that you’ll still need to take your second RMD this year if you delayed the first required distribution.
If you are still working past age 70½, you can skip the RMD from your current employer’s 401(k) if you don’t own 5% or more of the company. But you must take RMDs from traditional IRAs and 401(k)s from previous employers.
April 15. The federal tax filing deadline for 2019 returns falls on the regular date in 2020. Even if you file for a six-month extension, you’ll need to pay any tax due by this date. And don’t forget that you can make 2019 IRA contributions up until this date—up to $7,000if you are 50 and older.
This is also the deadline for the first estimated tax payment for 2020.
June 15. This is the deadline for the second quarter estimated tax payment for 2020.
July 1. Take the midyear temperature of your 2020 tax tab. Make sure withholding or estimated tax payments are on track to avoid underpayment penalties; you can avoid those penalties by paying at least 90% of the current year tax tab or 100% of the prior year tax tab (110% if a high incomer). And look for tax-saving moves to trim your 2020 tab.
September 15. This is the deadline for the third quarter estimated tax payment for 2020. If you are off track with estimated tax payments, or just don’t want to bother, you can withhold tax from your RMD. Withholding is considered to be evenly paid over the year, even if you withhold tax on an RMD taken in December, and it can help cover the tax on all your income for the year.
September 30. Your “annual notice of change” from your Medicare Advantage or Part D prescription-drug plan should be in your mailbox by today. Review the notice to learn about any changes in cost or coverage for 2021.
October 15. If you filed an extension for your 2019 return, today’s the day to turn it in. Medicare open enrollment also begins. From today until December 7, you can switch between traditional Medicare and Medicare Advantage, or choose new Advantage and Part D plans, with coverage effective 2021.
November 1. Early retirees in most states can buy 2021 health coverage offered on exchanges under the Affordable Care Act from today until December 15.
December 7. Medicare’s open enrollment period ends.
December 15. The ACA’s open enrollment period ends.
December 31. Make sure your RMD is out of your account by year-end. Ideally, don’t wait past mid December to take the RMD. For a qualified charitable distribution, it’s best to act by the first of December to ensure the charity receives the money by year-end. Traditional IRA owners 70½ or older can directly transfer up to $100,000 to charity in 2020.
Most tax moves to trim your 2020 tax tab need to be completed by this date. Consider maxing out contributions to your employer retirement account, harvesting portfolio losses, doing Roth conversions, making charitable gifts and using up your annual gift exclusion of $15,000 for 2020 to give gifts to as many people as you choose.
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