Here is what you need to know.
Provided by Taylor McClish
Financially, many of us associate April with taxes –
but we should also associate April with important IRA deadlines.
April 15, 2021 is the deadline to take your Required
Minimum Distribution (RMD) from certain individual retirement accounts.
Keep in mind that withdrawals from traditional,
SIMPLE, and SEP-IRAs are taxed as ordinary income, and if taken before age 59½,
may be subject to a 10% federal income tax penalty.
To qualify for the tax-free and penalty-free
withdrawal of earnings from a Roth IRA, your Roth IRA distributions must meet a
five-year holding requirement and occur after age 59½. Tax-free and
penalty-free withdrawals can also be taken under certain other circumstances,
such as the owner’s death. The original Roth IRA owner is not required to take
minimum annual withdrawals.
April 15, 2021 is the deadline for making annual contributions
to a traditional IRA, Roth IRA, and certain other retirement accounts.1
Some people may not realize when they can make their
IRA contribution. You can make a yearly IRA contribution between January 1 of
the current year and April 15 of the next year. Accordingly, you can make your
IRA contribution for 2020 any time from January 1, 2020 to April 15, 2021.2
Thanks to the SECURE Act, both traditional and Roth
IRA owners have the chance to contribute to their IRAs past age 72 as long as
they have taxable compensation (and in the case of Roth IRAs, MAGI below a
certain level; see below).2
If you are making a 2020 IRA contribution in early
2021, you must tell the investment company hosting the IRA account for which
year you are contributing. If you fail to indicate the tax year that the
contribution applies to, the custodian firm may make a default assumption that
the contribution is for the current year (and note exactly that to the I.R.S.).
So, write “2021 IRA contribution” or “2020 IRA
contribution,” as applicable, in the memo area of your check, plainly and
simply. Be sure to write your account number on the check. If you make your
contribution electronically, double-check that these details are communicated.
Taylor McClish may be reached at (503) 239-3060 or Taylor.McClish@cunamutual.com
Oregonians Financial Planning Website
This material was prepared by MarketingPro, Inc., and does not
necessarily represent the views of the presenting party, nor their affiliates. This
information has been derived from sources believed to be accurate. Please note
- investing involves risk, and past performance is no guarantee of future
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the services of a competent professional. This information should not be
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purpose of avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.
Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.
Citations.
1. irs.gov, November 23, 2020
2. irs.gov, November 10, 2020
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