With the end of the year fast approaching, it’s easy to get side-tracked when it comes to getting your finances in order. Don’t miss these six tax deadlines which you must complete before December 31st:
1. Deadline to Convert to a Roth IRA
Recent tax law changes have enabled all investors to convert to a Roth IRA from existing retirement accounts. A Roth IRA provides tax-free growth and income in retirement. In addition, if you have after-tax dollars in your retirement plan, you may be able to convert to a Roth IRA completely tax-free.
2. Deadline for Establishing a 2016 Qualified Retirement Plan
A qualified retirement plan is described in Section 401(a) of the Tax Code. The most common types of qualified plans are profit sharing plans and defined benefit plans.Usually your contributions are not taxed until you withdraw money from your plan. Most retirement plans you obtain through your company are qualified plans.
3. Last Day to Sell Securities to Realize a Gain or Loss
Consider selling investments that have lost value, since it can be a useful tax-reduction strategy. This strategy, called tax loss harvesting, can help reduce taxes on capital gains from profitable investments. We recommend that you simultaneously purchase a similar investment to keep the integrity of your portfolio.
4. Last Day to Complete Charitable Contributions for 2016
Your charitable contributions could have huge tax benefits for you, but you must complete your contributions before December 31st. Click here to find out the different ways you can give, rules for different methods of giving and the tax benefits associated with it.
5. Deadline to Withdraw Required Minimum Distributions from an IRA
Make sure you take any required minimum distributions (RMDs) from your IRA, 401(k) or employer-sponsored plan if you have reached age 70½. If you neglect to take your RMD, you could face a 50% penalty on the amount of RMD not withdrawn.
6. Deadline to Open an Individual 401(k) for a Small Business
If you have any questions or would like to meet with a Certified Financial Planner™, contact us and we will be happy to help.