Wrapping Up Your 2016 Finances
As Seen In the Fort Bend Independent
With the close of the year comes a number of different tax and personal finance deadlines of which you should be aware:
Required Minimum Distributions for IRAs
In the year you turn 70 ½, the IRS requires you to begin taking withdrawals from your IRAs. The penalty for choosing to ignore your required minimum distribution (RMD) is severe; a 50 percent penalty tax on the undistributed amount.
If you turned 70 ½ in 2016, you can choose when you take your distribution. Either you can take it before December 31 and it will be reported as income for you 2016 taxes, or you can wait until early next year and it will be reported on your 2017 taxes, but be aware: waiting means you must take two distributions in 2017. If you turned 70 ½ in a previous year, you must take your 2016 distribution by December 31.
Maxing Out Your 401(k)
Employees can contribute up to $18,000 ($24,000 if older than age 50) to their 401(k) accounts in 2016. Because your contributions are likely set up as automatic deductions from your paycheck, it’s easy to forget exactly how much you’ve contributed throughout the year. If maxing out your 401k contributions was a goal you had this year, make sure to log into your account to confirm this has happened before your final pay period for the year.
Open enrollment for 2017 healthcare coverage lasts through January 31, 2017. If you don’t have a plan through work the penalty for not obtaining coverage is up to $2,085 per household or 2.5 percent of household income, whichever is greater.
There are many other financial deadlines related to the end of the year. If you would like a comprehensive review of your 2016 finances, contact your local fee-only financial planner.
WJ Interests, LLC, has provided fee-only financial advice to individuals, families and businesses since 1996. For more information, please contact us at firstname.lastname@example.org or 281-634-9400.