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The End-of-Year Retirement To-Do List


With all the craziness surrounding the holidays, it’s easy to forget everything one needs to do to keep his or her retirement on track. So Encore asked Michael Wall, CEO of Wall Financial Group, for a quick checklist of what to do before 2012.  Here are four retirement-related recommendations.

Analyze Roth conversion scenarios: If you have an existing IRA and want to convert it to a Roth IRA, the deadline to convert (so that you pay the income taxes in 2012 rather than in 2013) is Dec. 31, says Wall. This is sometimes confusing to people, he says, because you typically have until April 15 to fund your retirement accounts for the previous year.  The main reason for converting to a Roth IRA is to pay the income tax now instead of in the future (as you would with a traditional IRA), which could be a good idea if you’re in a lower tax bracket now than you will be going forward.  For details, click here.

Max out 401(k) contributions: Americans also have until Dec. 31 to max out their 401(k) contributions for 2011.  “This is huge for two reasons: It’s a deduction on your taxes and if you haven’t already contributed enough to get the match, you are giving away free money.” Unfortunately, he adds, some plans don’t let you change your contribution amounts except at certain points in the year. Check with your 401(k) plan provider.

Take required IRA distribution if you’re 70 ½ or older: If you’re 70½ or older, the IRS requires you to withdraw a certain amount from your IRA each year by Dec. 31. “If you don’t take this money out, you’ll get hit with a penalty of 50% of what you should have taken out,” says Wall.  Click here for details on RMDs.

Meet with your accountant and financial planner: It can also be helpful to meet with both your accountant and financial planner just to make sure you’re on track for the following year, says Wall.  Make sure that you’re not going to miss out on any tax breaks and that your retirement income strategy is still intact, he says.


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.