End of Year Checklist

By Modern Wealth Management

December 13, 2018

With the end of the year quickly approaching the last thing you need is another checklist.

However, in the midst of preparing for all of the events and activities this holiday season holds, it is just as important to make sure you take some time to review your financial checklist. For example, have you considered doing a Roth Conversion or transferring money from an IRA to a charity tax-free? This has to be done before December 31st. To help make this task easier, we have put together our “End of Year Checklist” for you this holiday season.

  • Should you do a Roth IRA Conversion? For a 2018 Roth Conversion, the funds must leave the IRA or employer plan by December 31, 2018.
  • Have you taken your Required Minimum Distributions (RMDs)? There is a hefty penalty for not taking it for the year. However, if 2018 is the first year an RMD is required for a retirement account owner, the deadline is extended until April 1, 2019.
  • Do you plan on donating to a charity? Qualified Charitable Distributions (QCDs) allows a tax-free transfer directly from an IRA to a qualifying charity. You must be age 70.5 at the time of the distribution, and it needs to be completed by December 31.
  • Have you been named on a beneficiary form with multiple beneficiaries? When there are multiple beneficiaries, separate accounting must be done to allow each designated (named) beneficiary to use their own life expectancy to calculate RMDs. The deadline for separate accounting is December 31 following the year of the IRA owner’s death. Failure to meet this deadline means using the oldest beneficiary’s life expectancy.
  • Have you made all your IRA or Roth IRA contributions? Yes, you technically have until April 15th, 2019 to make a 2018 contribution. But why wait?
  • Do you need to tap into an IRA before reaching age 59.5? By using the 72(t) rules, clients can tap an IRA before 59.5 without a 10% penalty. The payments must be calculated using specific formulas and continue for at least five years or until age 59.5, whichever period is longer. If you do not stick to the chosen plan, or modify the payments, you will no longer qualify for the exemption from the 10% penalty. If you have calendar year 72(t) schedules, the 2018 payment must be made by December 31.
  • Have you taken a distribution of company stock from your company plan? If so, consider using the net unrealized appreciation (NUA) tax break; you will want to be sure that everything has been done properly by December 31. Double check that a distribution of ALL plan assets in ALL like plans at the employer has occurred. To qualify for the NUA tax break, the entire distribution must be completed in one tax year.
  • Have you made excess contributions into your IRA or Roth IRA? If you managed to put funds into an IRA or Roth IRA that did not belong there, such as an RMD from a different account, more than the allowed contribution amount, or you were not eligible to make a contribution, you will be subject to penalty for each year that they remain in the account as of the end of the year.
  • Did you review and update all beneficiary forms, as well as your employer plan, insurance policies, and/or annuities forms? Did any of these life events happen to you this past year? Births, deaths, a divorce, marriage or remarriage? Was there any illness that could change your beneficiary selection? Did anyone move, did you create a trust, receive an inheritance, make gifts, or get a new job during the year? All of these things could mean that you need to update your beneficiary forms. Remember, don’t just name primary beneficiaries on your beneficiary forms. You should always name both primary and contingent.

As always, the advisors at Modern Wealth Management are ready to help. If you have questions about how to complete any of the of above or questions about your personal retirement plan, contact us below or call 913-393-1000.

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Investment advisory services offered through Modern Wealth Management, Inc., an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.