Big Birthdays After 50 – And Why They Matter

, ,

So, you know how kids hit that age where they proudly declare they’re “eleven and a half” or some such? Well, guess what? Once you’re past the big 5-0, those half-birthday vibes start making a comeback. And here’s the twist – these birthdays and “half-birthdays” are not just about adding candles to your cake. Nope, they can seriously shake things up when it comes to your retirement game plan.

Age 50

Alright, let’s kick things off at the big 5-0. If you’re part of certain retirement plans, this is your cue to start making those annual catch-up contributions. Picture this: if you’re rocking a 401(k), 403(b), or 457 plan, you can throw in an extra $7,500 per year in 2024. Got a Simple IRA or Simple 401(k)? You’re looking at a cool $3,500 catch-up contribution. And don’t forget the traditional or Roth IRAs – you can stash away an extra grand annually. Sweet, right?

Age 59½

Now, we’re talking about the age where you can start dipping into your retirement plans without Uncle Sam slapping you with a 10% penalty. Say hello to withdrawals from your IRAs and employer-sponsored plans like the 401(k) and 403(b). Just a heads-up – traditional IRAs, 401(k)s, and the gang are taxed as ordinary income. But hey, no penalties? That’s a win.

Age 62 

So, 62 is the magic number to start cashing in on those Social Security retirement benefits. But hold up – if you’re still grinding away at work, your benefits take a hit. The deal is, they deduct a buck for every two you earn over the annual limit, which is $22,320 in 2024. It’s like Social Security’s way of saying, “We got you, but not all the way.”

Age 65

Hit 65, and guess what’s on the table? Medicare. The folks at Social Security suggest you get on it three months before the big day. Oh, and if you’re already soaking up those Social Security benefits, you’re in for automatic enrollment in Medicare Part A and Part B. No extra paperwork – sounds good to us!

Age 65 to 67

Now, here’s the scoop between 65 and 67. This is when you can start cashing in on the full 100% of your Social Security benefits. But here’s the kicker: the exact age depends on when you blew out your birthday candles. Born in ’55? Full benefits at 66 years and 2 months. Born in ’60 or later? Hold on tight till you hit 67.

Age 73

Fast forward to 73, and it’s time to start taking those required minimum distributions from your traditional IRA and other plans. And get this – you can still contribute to that traditional IRA past 70½, as long as you’re bringing in the bacon.

So, why does all this matter? Well, understanding these milestone birthdays is like having a secret map to navigate your retirement. It’s not just about celebrating another trip around the sun; it’s about making sure you’re on top of things and dodging those pesky penalties. Cheers to knowing when to blow out the candles and when to cash in on the perks! 🎉

As you embark on this next chapter, let RWM Financial Group be your co-pilot. When it comes to preserving your financial future, having a knowledgeable guide makes all the difference.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own, separate from this educational material.

Getting Ready for the Upcoming Tax Season

,

This information is not intended to be a substitute for specific individualized tax advice. We recommend discussing your specific tax situations with a qualified tax advisor.

Tax season is approaching and being prepared is the best way to make this tax season your easiest yet. In this document you will find important information and tools to help you get ready. As always, meeting with your financial professional early and often will ensure that all your questions are answered, so reach out to them today. 

Why are there different mailings for 1099-Consolidated Tax Statements?

During the 2023/2024 tax season, LPL will mail 1099 consolidated tax statements in multiple waves (similar to other major financial firms) to meet all IRS deadlines, reduce errors, and cut down on the need to mail corrected forms. 

See important tax season mailing dates below for a full list of mailing dates. Your original 1099 consolidated tax statement will be mailed shortly after we receive final income reclassification announcements from all securities held in your account. Timing of receiving final income reclassification data may result in your tax statement not arriving on the anticipated February date. In these cases, your 1099 tax statement will be mailed between February 16 and March 15, 2024.  

If your 1099 consolidated tax statement is not available on or before February 16, 2024, you’ll have access to a Preliminary 1099-Consolidated Tax Statement. This is an advanced draft only. Data may be incomplete and is subject to change. The preliminary 1099 should not be considered final and should not be used for the purpose of filing a tax return with the IRS or with any state or other regulatory agency. The preliminary form will be available electronically and won’t be mailed. You can access a preliminary 1099-consolidated tax forms statement in Account View or by reaching out to your financial professional. 

Income reclassification: What is it and what do I need to know? 

Income reclassification (sometimes called income reallocation) is an annual process where security issuers change the tax characterization of distributions that were paid during the tax year. Often, the result of income reclassification is a more favorable tax treatment. The income reclassification process takes place after the end of the tax year, during the first quarter, when security issuers announce their income reclassification for the previous tax year. The income reclassification process affects income distributions you may have received during the previous tax year. The IRS requires final income reclassification to be reported to you on Form 1099.  

Please note: Reclassification is an industry-wide activity. All financial industry firms receive reclassified data from issuers. 

Should I file an extension?  

It is always a good idea for you to maintain an open line of communication with your financial professional and your tax advisor throughout the year to ensure the best tax strategy and outcomes for you. This dialogue will help you decide if filing an extension is the best course of action. There are many reasons why filing an extension might make sense for you. For example, the volume of data or complexity of certain transactions inside or outside your account may require additional time to address. In addition, if you are expecting to receive your 1099 in the final mailing waves in March, it may be reasonable to consider filing an extension to allow sufficient time for your tax advisor to accurately complete your tax return forms. If you are unsure about your holdings, be sure to discuss them with your financial or tax professional. 

Corrected Forms: What do I need to know if I receive a corrected tax form in the mail? 

After your original 1099 tax statement has been issued, delayed reporting and reclassification from security issuers can sometimes occur, which may result in you receiving corrected 1099 statement. The IRS requires that a corrected form be issued for any adjustments received from the security issuers after your original tax form is produced.   

Security types most likely to reclassify are: 

• Regulated investment companies (mutual funds)

• Unit investment trusts (UITs)

• Real estate investment trusts (REITs)

• Widely held fixed investment trusts (WHFITs)

There is not an IRS cutoff or deadline for providing corrected 1099 forms. If you need to file an amended tax return, it’s recommended that you discuss the situation with your tax advisor prior to refiling so they can determine the best course of action based on your individual circumstances.  

For help answering tax season questions and finding additional saving opportunities, contact your financial professional. 

How to go paperless in Account View 2.0 

There are several benefits to you for going paperless with your important documents. 

• Get faster access to your documents,including tax forms.

• Peace of mind.eDelivery is more secure.

• Get convenient access to important documents from one location, anytime, anywhere.

For directions on how to set your tax forms to be paperless, please see the below steps. It takes less than 5 minutes to get setup. 

1. Login to your account www.myaccountviewonline.com. If you don’t have an Account View profile, you can sign up for one at the link above.

2. Once you are logged into your Account View profile, click on your name in the upper right corner of the screen. Select “Preferences” to navigate to your paperless settings.

3. From there you can choose to either go 100% paperless for all eligible documents or pick and choose which documents you receive by mail delivery.

Authorized User access in Account View 2.0 

You can provide an authorized user access to your Account View profile. This is a view-only access to any user you authorize. Who would you want to give access? Perhaps a significant other to view account information or your accountant, so they can download tax statements.  You control this setting within your user profile preferences.  

Tax preparation software 

If you use TurboTax or H&R Block, you’ll be able to import the information shown on your original or corrected 1099 tax information statement directly into the software. To upload your tax data into the software, you’ll need your full 8-digit LPL 

account and 11-digit Document ID listed on your tax statement. Forms will be available for download once your tax statement is available. We recommend you wait to download your tax statements until you have received all tax statements in the mail.  

Important tax season mailing dates 

Becoming familiar with the mailing schedule is one of the most important ways to stay organized for tax season. During the 2023/2024 tax season, to meet all IRS deadlines, reduce errors, and reduce the need to mail corrected versions, LPL will mail the 1099 Consolidated Tax Statements in multiple phases. Keep this chart handy to see when your final forms for tax year 2023 will be ready. 

For more information on IRS tax filing or extension deadlines, see IRS.gov. 

2023/2024 Tax Season Mailing DatesDownload

Please reach out to us at RWM Financial Group. We look forward to the opportunity to extend our services and to help position your investment portfolio for long-term success.

Member FINRA/SIPC Tracking #507811