9 Retirement Planning Deadlines You Shouldn't Overlook
Retirement deadlines
Retirement accounts have contribution deadlines you need to meet to qualify for tax breaks and avoid penalties. Social Security provides different payouts depending on the age you sign up. And if you miss Medicare eligibility windows, you could end up paying higher premiums for the rest of your life. Remember to factor these important dates into your retirement plans.
401(k) contribution deadline
401(k) contributions, which can be worth as much as $18,000 in 2015, are typically due by the end of the calendar year. Employees age 50 and older can additionally make catch-up contributions worth an extra $6,000, which are also due by Dec. 31.
IRA contribution deadline
You have until April 15, 2016, to contribute up to $5,500 to an IRA that can be applied to tax year 2015. Workers age 50 and older are eligible to contribute an additional $1,000, for a total contribution of $6,500 in 2015.
Required minimum distribution deadline
Required minimum distributions from traditional retirement accounts (except for the first distribution) are due by Dec. 31 each year. The penalty for missing a required withdrawal is a stiff 50 percent of the amount that should have been distributed.
First required minimum distribution deadline
You have until April 1 of the year after you turn 70 1/2 to take your first required minimum distribution from your retirement accounts. However, all subsequent distributions are due by Dec. 31. Delaying your first required distribution could necessitate two required withdrawals in the same year, which could result in an abnormally large tax bill.
Medicare eligibility
You can sign up for Medicare parts B and D during a seven-month window that begins three months before you turn 65. Medigap has a different six-month initial enrollment period that begins when you're 65 or older and enrolled in Medicare Part B. Missing these eligibility windows could result in higher premiums for the rest of your life.
Medicare open enrollment
Medicare beneficiaries can make changes to their prescription drug coverage between Oct. 15 and Dec. 7 each year. During this open enrollment period, you need to make sure that the medications you use will continue to be covered with affordable out-of-pocket costs and switch plans if they won't.
Social Security eligibility
You can sign up for Social Security beginning at age 62. However, payments are reduced if you sign up at this age. If you claim benefits at age 62, you will get 25 percent smaller monthly payments if your full retirement age is 66 and 30 percent smaller payments if your full retirement age is 67.
Social Security full retirement age
People born between 1943 and 1954 are eligible to claim unreduced Social Security benefits at age 66. The full retirement age gradually increases in two-month increments for people born in each year between 1955 and 1959, before hitting age 67 for everyone born in 1960 or later.
Maximum possible Social Security eligibility
If you delay claiming Social Security after your full retirement age, you accrue delayed retirement credits that will increase your payments by about 8 percent per year. However, after age 70, there is no additional increase for continuing to delay your payments.
More From US News & World Report
