When ringing in a new year, many people resolve to be better organized or improve how they manage their finances. We suggest developing a road map for this year's financial journey.
January is the time to review your sources of income and your budget to ensure essential expenses are covered, and that your portfolio matches your risk tolerance.
If working, try to maximize your 401K contributions as early in the year as possible. You can stash up to $19,000 in a 401(k), workers 50 and older can add $6,000 more. The contribution limit for IRAs in 2019 is $6,000, with those 50 and older able to save up to $1,000 extra.
January started Medicare's general enrollment period. Coverage begins July 1. From now until March 31, people already enrolled in a Medicare Advantage plan can change Advantage plans or switch to traditional Medicare.
Jan. 15 was the deadline for fourth quarter 2018 estimated payments. By Jan. 31,1099s and W-2 forms are mailed out, and should be reviewed closely for errors.
Some other key dates to remember include:
n March 31. Medicare general enrollment and Medicare Advantage open enrollment end.
n April 1. If you turned 70½ in 2018, it's the deadline to take your first RMD (required minimum distribution) from IRA's or 401(k)'s. First-timers get this one-time extension on their RMD (future RMDs must be taken by Dec. 31). Find the calculation in IRS Publication 590-B.
If you turn 70½ in 2019, you might consider taking your first RMD this year. By delaying the first RMD to the following year, you must take both your first and second RMDs in the same year. Roth IRAs don't have RMDs for the original owner, but Roth 401(k)s do.
If you are working past age 70½, you can skip the RMD from your current employer's 401(k) if you don't own 5% or more of the company. You'll still need to take RMDs from your IRAs and any 401(k)s you hold from prior employers.
n April 15. The federal tax filing deadline for 2018 is here. You can file for a six-month extension, but you still need to pay any tax owed by this date. And you have until April 15 to fund an IRA for the previous year--those 50 and older the limit is $6,500 for 2018.
April 15 is also the deadline for the first estimated tax payments. If you have foreign financial accounts that exceeded $10,000 at any time in 2018, this is the deadline to file the Report of Foreign Bank and Financial Accounts, with the U.S. Treasury.
n June 15. The deadline to pay estimated tax for the second quarter of 2019.
n July 1. Review your tax picture for 2019. Consider an IRA qualified charitable distribution if over 70½, this allows you to directly transfer up to $100,000 annually from the IRA to charity. The money counts toward the IRA RMD, but doesn't show up in adjusted gross income, lowering taxon so Social Security, as well as other positive tax impacts.
n Sept. 15. The deadline to pay estimated tax for the third quarter of 2019.
n Sept. 30. Review the "annual notice of change" from your Medicare Advantage or Part D prescription-drug plan. Review the notice to learn about any changes in cost/coverage that takes effect Jan. 1.
n Oct. 15. If you filed an extension for your 2018 tax return, it's due here. Medicare open enrollment begins. From now until Dec. 7 you can switch Medicare Advantage, traditional Medicare and Part D plans, coverage starts Jan. 1, 2020.
n Nov. 1. Those who buy health insurance offered on exchanges can shop for 2020 coverage from this date to Dec. 15.
n Dec. 7. Medicare's open enrollment period ends.
n Dec. 15. ACA's open enrollment period ends. Don't wait on RMD's. Consider Dec. 15 deadline for taking RMDs. Fail to take the RMD in time means a 50 percent penalty.
n Dec. 31. Any last-minute tax moves are due here, including 401(k) contributions. Make sure charitable donations you want to count for 2019 are made, and if you want to make annual gifts-up to $15,000 per individuals, do so by this date.
Dean Owen is a local CPA, with a master's degree in taxation, and a Personal Finance Specialist designation. He is also the author of several books on the Affordable Care Act and various tax planning publications. He can be reached at Dean@owencpa.com or 270-554-0720.