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The deadline for filing your tax return this year — April 17 — isn’t the only tax season deadline.
For example, the Internal Revenue Service imposes various deadlines on accounts sheltered from certain income taxes under the federal tax code. These accounts include retirement plans like individual retirement accounts (IRAs), for which three deadlines are approaching.
Anyone who has an IRA or is considering opening one between now and April 17 should mind these dates.
In some cases, missing a deadline means losing a chance to contribute to a tax-sheltered retirement account. In other cases, missing the deadline means the IRS might hit you with a penalty.
Contribution deadline — April 17
For tax year 2017, the deadline for putting money in an IRA is April 17.
This is key because you can only contribute so much money to an IRA each year. So, if you miss this deadline, you will have passed up one of a finite number of chances to add savings to a tax-sheltered account.
For 2017, the contribution limit is $5,500 or $6,500, depending on your age.
Excess contribution withdrawal deadline — April 17
The IRS also imposes a deadline by which excess contributions must be withdrawn.
This means that if you contributed more than the IRS allows to IRA accounts for tax year 2017 — the $5,500 or $6,500 cap mentioned above — you have until April 17 to withdraw the excess amount from your IRAs.
Otherwise, Uncle Sam will penalize you — to the annual tune of 6 percent of the excess amount left in your IRAs.
Required minimum distribution deadline — April 1
As the IRS explains RMDs:
“You cannot keep retirement funds in your account indefinitely.”
Basically, Uncle Sam wants folks with certain types of retirement accounts to withdraw a minimum amount of money from those accounts each year, starting the year in which these folks turn 70½.
The exact amount of an RMD depends on multiple factors. The IRS offers RMD worksheets online.
For folks who turned 70½ prior to 2017, the deadline for taking RMDs was Dec. 31. So, the deadline for them to take RMDs for tax year 2017 already has passed. The deadline for such folks to take RMDs for tax year 2018 is Dec. 31 of this year — and so on.
In other words, after your first RMD, the deadline remains Dec. 31 of the applicable tax year.
Have you prepared for these key dates? Let us know below or on Facebook.