Don’t Forget These Important Retirement Deadlines

September 29, 2017 12:15 PM
By Brian Dobbis

Now that fall is in full swing, be sure to mark your calendar for steps that can help boost your tax-advantage retirement savings.

Many people consider fall their favorite season. Everything in nature bursts with its last beauty, as if nature had been saving up all year for the grand finale, as one writer put it. And if you’re into football, playoff baseball, and children’s school activities, it may be easy to lose sight of some important retirement deadlines. So here’s a handy summary for future reference.

September 30

For beneficiaries that inherited IRAs in 2016, September 30 is a pivotal date. It’s what is commonly referred to as the beneficiary “designation date.” For example, in the case of an IRA owner who died in 2016, September 30, 2017, would be the designation date. September 30 is the date that beneficiaries must be “identified” for the purposes of determining minimum distribution options.

October 1

  • The last day in which an employer can establish a SIMPLE IRA plan, effective for 2017. Technically, the deadline this year is Monday, October 2 (because October 1 falls on a Sunday). Establishing a SIMPLE plan means completing the plan paperwork or agreement, such as IRS Form 5304-SIMPLE. In addition, employees must be provided certain plan disclosures. (For more information, see here.)
  • The last day for an employer to establish a Safe Harbor 401(k) plan effective for 2017.

October 15

  • This is the deadline for making 2016 SEP IRA contributions, if the employer’s tax return is on extension. (See our recent refresher here.)

Tip: Other prior-year IRA contributions (e.g., Roth, traditional) are not permitted, even if an individual is on extension.

  • This date also is the deadline for recharacterizing a 2016 Roth IRA conversion. In addition, an investor can recharacterize a Roth IRA contribution to a traditional IRA or an IRA contribution to a Roth IRA. The former is common when investors determine that they don’t income-qualify to contribute to a Roth IRA. (For additional details, click here.)  

Tip: Don’t wait until October 15. Why? Recharacterization must be completed by October 15. In many cases, the IRA custodian needs more than one day to process a recharacterization.

  • Last, this date is the deadline for removing an excess contribution in order to avoid a 6% penalty on the excess. Depending on the type of IRA, there are ceilings on the amount of funds that can be deposited into a traditional or Roth IRA in any given year. When those limits are exceeded, excess contributions result and they are potentially subject to a 6% penalty if not corrected in a timely fashion (as described here).  

October 31

  • The deadline for IRAs that were inherited by a trust beneficiary in 2016. Required documentation must be provided to the IRA custodian no later than October 31. A copy of the trust then must be forwarded to the IRA custodian in order for the trust to qualify as a “look-through” trust. In addition to the trust requirement, there are a number of requirements to qualify as a look-through trust, thus allowing the beneficiary the ability to “stretch” payouts. (For more on naming a trust beneficiary, click here.)  

November 1

  • Plan sponsors of SIMPLE IRAs must notify each eligible employee by distributing an annual notification before the beginning of the new plan year. The election period generally is the 60-day period immediately preceding January 1 of a calendar year for employers who continue offering a SIMPLE IRA plan for 2018.

The notice will provide plan specifics, including eligibility (to make or change salary deferrals) as well as the employer contribution formula (e.g., 3% match, or 2% non-elective) for the 2017 plan year.

Tip: Once the employer contribution formula is determined, it cannot be modified until the following plan year.

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