End of the Year Retirement Plan Reminders

Posted By: Chris Tanner ICOR Blog & News,

It is hard to believe 2022 is already here. January is often a good time to do a review of retirement plan strategies. April 15th is looming, and retirement plans offer a nice tax deferral strategy. It is a good idea to check on those plans you set up years ago to avoid any potential issues down the road. Let us look at some important reminders.

It is important to periodically review the designation of beneficiary for EACH retirement plan you own. First, double check and make certain that every retirement plan you participate in has a designation of beneficiary on file. The designation of beneficiary supersedes any estate planning tools such as wills or trusts, so be sure to have one on file to avoid probate court and future issues for your heirs. Second, review your beneficiaries. Make certain the information you listed 10 or 20 years ago is still accurate. Life events such as divorce, marriage, the birth of a child or grandchild, and deaths in the family all greatly impact how you want to leave things for your heirs. Update the beneficiary form if needed, but just be sure to double check the accuracy of all beneficiary forms.

Retirement plans like SEP IRAs, Traditional IRAs, and solo 401Ks allow you to save money for retirement and are often tax deductible. Let us look at the 2021 contribution limits, and their respective due dates.

Traditional IRA Contribution Limit: $6,000 under 50, or $7,000 over 50, and April 15, 2022, is the contribution deadline.

SEP IRA Contribution Limit: $58,000, and the contribution deadline is the same as the business’ tax return

Solo 401K Contribution Limit: $58,000 under 50, or $64,500 over 50. Employee contributions are generally due in January of 2022, and Employer contributions are due before the business files it’s return

Be sure to consult your CPA, or a trusted tax advisor to determine your personal contribution limits, and to see how the contribution might benefit you.

For those of you who prefer to utilize Roth retirement accounts, like the Roth IRA or Roth Solo 401K here are the 2021 contribution guidelines.

Roth IRA Contribution Limit: $6,000 under 50, or $7,000 over 50, and April 15, 2022, is the contribution deadline.

Roth Solo 401K Contribution Limit: $19,500 under 50, or $26,000 over 50 years of age. Contributions are generally due in January of 2022.

There are several ways to utilize retirement plans for investing and tax savings. Be sure to consult a tax professional to help you maximize the benefits of contributing to retirement plans. If you have any questions, feel free to contact New Direction Trust Company.