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Educational Resources

By Theresa Fry, Senior Vice President and Manager, IRA’s and Retirement Planning

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Have you been making your lists and checking them twice?  Here are some IRA “To-Dos” you may want to check off before this year is over.

  • Have You Made Your IRA Contributions? It’s not too late.

Anyone who is working and has earned income can set aside money for retirement through IRAs.  If you haven’t made retirement savings your priority this year, I have good news for you.  It is not too late!  You have until April 15th to make your IRA contributions.  As you give and receive gifts over the holidays, take the opportunity to invest in your future by making your IRA contributions now.  Not sure which type of IRA is right for you?  Your Benjamin F. Edwards financial advisor can help.

  • 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 age 70 ½ or older and 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 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.  Anyone, regardless of age or income can do a Roth IRA 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.

  • 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 20, 2018 |