Sarah Brenner, JD
Director of Retirement Education
The year 2024 has flown by and the holidays season will soon be upon us. That means time is running out on year-end IRA deadlines. You will want to be sure to get the following three IRA-related tasks done sooner rather than later to avoid penalties and missed opportunities:
1.) Take your RMD. If you have a traditional IRA and turned age 74 or older this year, you will need to take a 2024 required minimum distribution (RMD) by the end of the year. If you turned 73 in 2024, you will have a little extra time to take your first RMD. Your deadline will be April 1, 2025. (But delaying your 2024 RMD into 2025 means you will have two RMDs due for 2025.) Those who must take an RMD for 2024 should not wait until the last minute. Many custodians have earlier internal deadlines to process these transactions, and waiting until the last minute can result in mistakes.
Many beneficiaries are required to take 2024 RMDs from inherited IRAs. If you inherited an IRA prior to 2020 or if you are an eligible designated beneficiary who inherited an IRA between 2020 and 2023, you will need to take an RMD for this year. Beneficiaries subject to the new 10-year payout rule under the SECURE Act catch a break. Due to all the confusion surrounding the 10-year rule, the IRS has said that a beneficiary subject to this rule is not required to take a 2024 RMD.
2.) Do a QCD. The holiday season is the time when many are feeling charitable. A good way to give if you have an IRA and are age 70 ½ or older is to do a qualified charitable distribution (QCD). This is a tax-free transfer directly from your IRA to the charity of your choice. The limit for 2024 is $105,000. A QCD can satisfy an RMD and is not included in modified adjusted gross income. There is no such thing as a “prior year QCD,” so if this strategy is of interest to you for this year, you will need to get it done by December 31, 2024.
3.) Convert to a Roth IRA. Tax rates are historically low, and those rates may not last much longer. This may be the ideal time for Roth IRA conversions. Time is running out though for 2024. The deadline for converting for this year is December 31, 2024.