Financially, many of us associate spring with taxes – but we should also associate December with important IRA deadlines. This year, like 2020, several changes and differences will be seen.
December 31, 2021 is the deadline for taking over the required minimum distribution from certain individual retirement accounts.
May 17, 2021 is the deadline for making 2020 annual contributions to traditional IRAs, Roth IRAs and some other retirement accounts. This extension from the traditional deadline of April 15 continues after the extension of the traditional tax deadlines.
Some people may not know when they can contribute to the IRA. You can make an annual contribution to the IRA from January 1 of the current year to April 15 of the following year. Accordingly, you can contribute to the IRA for 2021 at any time, from 1 January 2021 to 15 April 2022.
Thanks to the SECURITY Act, a person can open or contribute to a traditional IRA who is over 70 years of age if he or she has a taxable income.
If you are making an IRA contribution in 2021 in early 2022, you must tell the investment company that hosts the IRA account for which year you are contributing. If you do not specify the tax year to which the contribution relates, the custodian may assume that the contribution is for the current year (and record this accurately with the IRS).
So, enter “IRA Contribution 2022” or “IRA Contribution 2021”, as applicable, in the memo area of your check, clearly and simply. Be sure to write your account number on the check. If you submit your contribution electronically, double-check that the details provided are communicated.
This information should not be construed by any client or potential client as providing personalized investment advice. All investments and investment strategies have the potential for profit or loss and it cannot be guaranteed that the future performance of any particular investment or investment strategy, including those discussed in this material, will be profitable or equal to any historical levels of performance. Investment strategies such as asset allocation, diversification or rebalance do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. Any referenced goal is not a prediction or projection of actual investment results and it cannot be certain that any goal will be achieved. Stacy Bush is with Bush Wealth Management.