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December 14, 2015 at 06:08 AM
As the end of 2015 draws nigh, many advisors will be going through an end-of-year checklist. In this post, we will discuss the first two items on the list and cover the others next week.
Even though we have discussed some of these in the past, there are a few things that may need your attention as the end of the year draws near.
1) RMDs
2) Tax Loss Harvesting
3) Examine Budget for Following Year
4) Reevaluate Technology
5) Refine Marketing Plan for Following Year
To begin our to-do list, let’s start by looking at the complex rules around required minimum distributions from your clients’ retirement plans.
RMDs
The required minimum distribution rules establish the minimum amount that must be distributed upon reaching age 70 ½. The RMD rules apply to the following plans:
- Traditional, SEP, and SIMPLE IRAs
- Stock Bonus, Profit Sharing, and 401(k) plans
- 403(b) plans
- 457 plans
The RMD rules are complex and failure to comply can be costly. These are some of the most important points.
1) Roth IRA owners have no RMD requirement during their lifetime; beneficiaries of a Roth IRA are subject to the RMD rules after the owner’s death.
2) Participants in a qualified employer-sponsored retirement plan who elect to work beyond age 70 ½ may continue to contribute to the plan and are not subject to the RMD until they retire.
3) The RMD must be completed by December 31 each year with one exception (see #4).
