Have You Done Your Annual Retirement Planning Checkup?

As the year winds down, it’s time to assess your retirement accounts, look at your retirement plan and determine if you should make an annual contribution.

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As the last weeks of 2017 draw nigh, it’s time to assess your retirement accounts and do a bit of retirement planning.

First, be sure the beneficiaries and contact information on your accounts are current. But you also want to make sure your account and your retirement plans are in sync. This is true of all types of retirement plans.

As you approach retirement, look at your contribution levels. And if you’re age 70 1/2 or older, make sure you’ve met your required minimum distribution (RMD) for the year. Remember, the last business day of the year is Friday, December 29.

IRA Contributions

Do you have any Traditional or Roth Individual Retirement Accounts (IRAs)? For 2017 and 2018, the contribution limit for both Traditional and Roth IRAs is $5500. If you have more than one account, the sum total of all accounts may not exceed $5500. However, if you're over 50, you may be allowed an additional "catch-up" contribution of $1000, for a total of $6500.

But, if your taxable compensation is less than your Traditional or Roth IRA contribution limit, you may only contribute an amount equal to your taxable earnings. In other words, you can't contribute more than you earned.

You should also be aware of the Traditional and Roth IRA contribution deadline. You have until Tuesday, April 17, 2018, to take full advantage. If you accidentally contributed above your limit, you may have a chance to withdraw some of those funds by the due date of your tax return—including extensions—or else face the IRS’s 6% tax penalty each year on the excess amounts. 

And what if you have a Simplified Employee Pension (SEP) IRA? The SEP contribution limit can be 25% of your income up to $54,000 for the 2017 tax year. That increases to $55,000 for 2018. For SEPs, the contribution deadline is the same as your filing deadline, including extensions.

The ABCs of RMDs

If you’re 70 1/2 years old or older, you must take your required minimum distribution (RMD) by December 31. There is one exception, though, for the year in which you turn 70 1/2. That first RMD may be postponed until April 1 of the subsequent year. From then on, you must take it by December 31 or face a stiff penalty.

Pay attention to those RMD deadlines on your traditional IRA (Roth IRA rules don’t require RMDs). The amount depends on the balance and your life expectancy, but if you fail to take them, you could be facing a 50% tax penalty. Do the math: If your RMD is at $3,750 annually, you could be paying the tax man an extra $1,875 for doing nothing.

If you have more than one traditional IRA, you can take the RMD from one account or a combination of accounts, not including Roth IRAs. If you’re looking to an investment account to help cover your RMD, remember that it takes, on average, two days for a trade to “settle.”

You may also be able to enroll in automated RMD distributions; that way, you don’t have to remember anything until the check arrives. Or, you might be able to just call the custodian and ask for a transfer of the funds.

What if your IRA investments are on fire and you don’t want to liquidate them in order to meet your RMD? You can take an “in-kind” distribution by transferring the securities to a taxable account. Yes, like a cash distribution, they’ll then become taxable. But be careful with this. You still need to ensure you have the cash available so the withdrawal can be processed. Check with a financial professional or your tax advisor before taking this route.


According to the Medicare.gov blog, Medicare’s open enrollment closes December 7 for changes you want to take effect January 1. That means any coverage changes tied to Medicare Part C (also called the Advantage plan) or Medicare Part D for prescription drugs must be done by then.

Don’t confuse this enrollment period with your initial registration period. That seven-month signup clock starts ticking three months before the month you turn age 65 and ends three months after it. 

Death of a Spouse

If your husband or wife passed this year, you can still file a joint tax return and potentially claim an exemption. There might also be some inheritance issues to deal with. You may want to check with a tax attorney to see what rules apply to you. Remember, too, that beneficiaries of retirement, annuities, and IRAs are different. And for more on estate planning tax considerations, please refer to this primer.

Maximum contribution limits cannot be exceeded. Contribution limits provided are based on federal law as stated in the Internal Revenue Code. Applicable state law may be different. TD Ameritrade does not provide legal or tax advice. Please consult your legal or tax advisor before contributing to your IRA.

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