For Our Clients

Educational Resources

By Theresa Fry, Senior Vice President and Manager, IRAs, Retirement and Education Planning

Print This Post Print This Post

Some people enjoy the thrill of waiting to the last minute and like the rush of adrenaline when they work under the pressure of a deadline.  If that’s you, then you’ll be happy to hear you have eight business days left in 2019!  If you are more of a planner and list maker like me, that might make you uneasy.  Either way, the checklist below can help ensure you don’t miss out on important financial deadlines with your IRAs and retirement accounts before this year is over.

  • Are you considering a Roth IRA conversion this year? The conversion deadline is December 31st.

Converting is a way of shifting Traditional IRA balances to a Roth IRA. You can also complete a conversion through a direct rollover from your 401(k) or other employer-sponsored retirement plan once you are eligible for distributions, such as when you retire or separate from service.  Some retirement plans will even allow in-plan Roth conversions while you are working so you can shift pre-tax employee salary deferral balances to a Roth account within the plan.

Anyone, regardless of age or income, can do a Roth conversion.  Amounts you convert to a Roth IRA are generally taxable.  Some people consider a Roth conversion because they want to have a source of tax-free income in retirement.  Others look at a Roth conversion as a way to leave a tax-free legacy to their beneficiaries after death.  Others still, like the fact that required minimum distributions do not apply to Roth IRAs.   Because conversion can put you in a higher income tax bracket and cannot be “undone”, talk to your tax advisor before you decide if it is right for you.  There are only a few days left to complete a conversion if you want the income reported on this year’s tax return.   Conversions must be completed by December 31.

  • Did you turn 70 ½ or older this year? Don’t forget to take your RMD.

If you own traditional IRAs, SEP IRAs, or SIMPLE IRAs, turning age 70 ½ (6 months after your 70th birthday) means you must begin annual required minimum distributions (“RMDs”).  Your first year RMD can be taken any time during the year you turn 70 ½, but must be taken no later than April 1 of the following year.  Failure to receive your RMDs, or withdraw them on time, can result in a 50% IRS penalty.  All RMDs from traditional IRAs, SEP IRAs and SIMPLE IRAs must be taken by December 31 after the first year.  Keep in mind that you do not have to take a separate RMD from each IRA you own.  Instead, you may add together the balances of your IRAs, and take the total amount required out of any one or combination of IRAs you own, but you cannot combine IRA RMDs with RMDs that are required from employer-provided retirement plans like 401(k)s or 403(b)s.  If you are still employed and you are older than age 70 ½, you may be able to delay the start of your RMDs from your employer-provided retirement plan until after you retire.

If you are charitably inclined, one way to satisfy your RMD and get a tax-free distribution at the same time is to make a Qualified Charitable Distribution (“QCD”).  A QCD is a tax-free direct gift from your traditional IRA to a qualified charity.  Although only people age 70 ½ or older can make these tax-free gifts, the amount you can gift from your traditional IRA is not limited to your RMD.  Amounts up to $100,000 a year may be distributed from your traditional IRA tax-free as a QCD.  Employer-sponsored retirement plans, including SEPs and SIMPLEs, cannot take advantage of QCDs.  Because QCDs are tax-free, you also cannot claim a charitable deduction on your income tax return for them.  Check with your tax professional to see if a QCD makes sense for you.

  • Did you inherit an IRA this year? You may need to take an RMD before year end.

If you inherited an IRA from a parent or anyone other than your spouse, you also have to take required minimum distributions each year.  Inherited IRA RMDs are required from Traditional, Roth, SEP, and SIMPLE IRAs and generally must begin in the year following the year of death.  In some cases, if the account owner had not completely satisfied his or her own RMD prior to death, the beneficiaries that inherit the IRA are required to take the remaining RMD amount by December 31 of the year of death.

  • Are your IRA beneficiary designations up to date? It’s quick and easy to make changes if needed.

Over the course of the year, you may have had any number of changes in your life.  If you have new children or grandchildren that were born, experienced a marriage or divorce, or perhaps lost a loved one, make sure your IRA beneficiary designations reflect your current goals.  Beneficiary designations don’t automatically change to reflect these life events and can easily become out of date if neglected.  Updating a beneficiary designation is easy, so talk to your financial advisor if yours needs some adjustment.


This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards & Co. is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.

December 19, 2019 |