As 2022 draws to an end, here are several time-sensitive financial tasks to consider.
Year-End Retirement Planning
Contribute to 401k plans by December 31st
Deposits to your 401k plan are due by the end of the year. Typically, 401k contributions are made through payroll deduction. It may take your company a pay period or two to process a change and make the deposit, so be sure to allow enough time for this to be completed.
Determine if you will need to take an RMD (Required Minimum Distribution).This is the minimum amount of money you must withdraw from employer-sponsored retirement accounts and individual IRAs.
The age at which individuals need to withdraw RMDs was changed from 70.5 to 72 due to the SECURE Act legislation.
Donate your IRA distribution to charity
If you don’t need the money from your RMD, you may be able to avoid paying income tax on part or all of the required distribution if you directly transfer an IRA withdrawal to a qualifying charity.
Qualify for the Savers Credit
Low- and moderate-income workers who save for retirement in a 401(k) plan or individual retirement account could qualify for the saver’s credit. This retirement savings contribution credit can be claimed when filing taxes.
More time for IRA contributions
You have until April 18, 2023, to make an IRA contribution that will qualify you for a tax deduction on your 2022 return. You can contribute to an IRA shortly before filing your taxes to get a nearly immediate reduction in your tax bill.