A new year means a lot of resetting things in our lives.
It means new calendars on the desk and hanging on the wall. It means a month or so of fixing it when you jot the date with the old year.
And just like another year usually means an annual checkup with your doctor, it should also mean an annual checkup on your retirement plan. No waiting room here, though – let's dive in.
Are You Putting Money In?
First, let’s talk about Individual Retirement Accounts, or IRAs. Choosing the right type of IRA is crucial. The two primary types are the Traditional IRA and the Roth IRA, each with its own tax implications.
With a Traditional IRA, your contributions are typically tax-deductible, and your investments grow tax-deferred. You only pay taxes when you withdraw in retirement. This can be a great option if you expect to be in a lower tax bracket after retirement.
On the other hand, a Roth IRA offers tax-free growth and tax-free withdrawals in retirement. While contributions are not tax-deductible, this account is ideal if you anticipate being in a higher tax bracket later on or prefer tax-free income during retirement.
Understanding contribution eligibility is key. Both Traditional and Roth IRAs have guidelines for regular, spousal, and catch-up contributions. For instance, if you're 50 or older, you can make catch-up contributions, allowing you to save more as you near retirement.
Is It Time to Take Money Out?
Now, let’s address when it's time to start withdrawing from your IRAs, as required by law. This involves Required Minimum Distributions, or RMDs.
An RMD is the minimum amount you’re generally required to withdraw from certain retirement accounts each year. For Traditional IRA account holders who are required to take an RMD, the annual distribution generally must be completed by December 31.
At what age? Let's look.
If you’re turning 73, your first RMD is generally due by April 1 of the year following the year you turn 73. After that first distribution, subsequent RMDs are generally due by December 31 each year.
It’s important to review your IRA and determine whether you’re required to take an RMD. Missing an RMD deadline or withdrawing less than the required amount could result in an IRS tax penalty.
Want to make things easier going forward? Radiant members can establish recurring RMD payments by completing an IRA Required Minimum Distribution Scheduled Payment Election form at a local Radiant branch.
And one date to keep on the radar: Beginning in 2033, the RMD starting age increases to 75 for those born in 1960 or later.
Because everyone's retirement and tax situation is different, consider consulting with a qualified tax or financial professional if you have questions about when RMD rules apply to you.
Are Your Beneficiaries Up to Date?
While you’re giving your IRA its annual checkup, there’s one more important detail worth reviewing: your beneficiary designation.
Your IRA beneficiary designation is separate from the beneficiaries listed on your other Radiant accounts. So, even if you’ve recently updated your account beneficiaries, it’s a good idea to review your IRA separately to make sure everything is current and complete.
It’s especially important to take another look after a major life event, such as a marriage, divorce, birth or adoption of a child, or the death of a beneficiary. Keeping this information up to date can help minimize potential issues when your IRA assets are distributed.
Need to make a change? You can review and update your IRA beneficiaries by visiting a Radiant branch, calling our Member Service Center, or visiting Retirement Central on our website. From there, select Manage Your Account, then Update Beneficiary.
It only takes a few minutes to check — and it’s one of those small financial housekeeping tasks that can make a big difference down the road.
The Ongoing Journey
Retirement planning is an ongoing journey, and it's never too late to make impactful changes.
Remember you can always go here in Radiant's Retirement Central to handle IRA transactions.
If you want to review or adjust your IRA strategies, we're here to help. You can reach out to us via call, email, or by visiting your nearest Radiant branch.
We're excited to provide you with any guidance and support you need.
