You Can’t Afford to Miss These 4 Deadlines for Retirement Accounts

You Can’t Afford to Miss These 4 Deadlines for Retirement Accounts Photo by Sean Locke Photography / Shutterstock.com

The deadline for filing your tax return — April 15 — isn’t the only tax-season deadline.

The IRS imposes various deadlines on tax-advantaged accounts — including individual retirement accounts (IRAs), workplace retirement plans and health savings accounts (HSAs).

In some cases, missing a deadline means losing a chance to add money to a tax-advantaged account. In other cases, it means the IRS might hit you with a steep penalty.

Following are several deadlines for tax-advantaged accounts that are just a couple of weeks away.

HSA contribution deadline — April 15

Health savings accounts are not exclusively for retirement savings, but you can use them as back-up retirement accounts, as we discuss in “3 Reasons You Need a Health Savings Account — and How to Open One Today.”

Regardless of how you use your HSA, though, the deadline for contributions is the same: Tax Day.

This is key because you can only contribute so much money to an HSA each year. So, if you miss the April 15 deadline, you will have passed up one of a finite number of chances to add money to a tax-free account for 2018. That’s right: It’s possible to never pay taxes on money that goes through an HSA.

For 2018 — the year that matters when thinking of this season’s tax deadlines — the HSA contribution limit is $3,450 for taxpayers with self-only health insurance coverage and $6,900 for those with family coverage.

IRA contribution deadline — April 15

For tax year 2018, the deadline for putting money in an IRA is April 15.

As with HSAs, if you miss the IRA contribution deadline, you will have passed up one of a finite number of chances to add savings to a tax-advantaged account.

For 2018, the IRA contribution limit is $5,500 or $6,500, depending on your age.

Excess IRA contribution withdrawal deadline — April 15

The IRS also imposes a deadline by which excess contributions must be withdrawn.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 2018 — the $5,500 or $6,500 cap mentioned above — you have until April 15 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

Folks who turned 70 ½ in 2018 generally have until April 1 to take their first required minimum distribution (RMD) from many types of retirement accounts, including traditional IRAs as well as workplace retirement plans like 401(k)s. Roth IRAs are not subject to RMDs during the account owner’s lifetime.

As the IRS explains about 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 they turn 70 ½. And they means it: The penalty for missing an RMD deadline is a 50 percent tax on the amount that you failed to withdraw as required.

The exact amount of an RMD depends on multiple factors. The IRS offers RMD worksheets online.

For folks who turned 70 ½ prior to 2018, the deadline for taking RMDs was Dec. 31. That’s because after your first RMD, the deadline remains Dec. 31 of the applicable tax year.

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