7 Resolutions for Your IRA for 2017
A new year brings a fresh start and a chance to do things better. You probably have a few resolutions for 2017. You may be planning to eat healthier, get more exercise, or stick to a budget. As you are making your resolutions for the new year, don’t overlook your IRA. Here are a few suggestions for 2017.
1. Don’t Wait. Thinking about making an IRA contribution? You have until the tax-filing deadline including extensions to get it done. This means you can still make your 2016 IRA contribution anytime until April 18, 2017. Why wait until the last minute? Get it done sooner. By doing so, you will not only avoid last-minute problems but also get those dollars in your IRA sooner for maximum growth. While you are at it, why not consider making your contribution for 2017 at the same time? Making your contributions early can make a surprising difference in the amounts you will have accrued in your IRA when you reach retirement.
Do you have to take required minimum distributions (RMDs) from your IRA? If so why not apply the same “get it done” philosophy? While there may be some rare individuals with valid reasons for delaying their RMD until the very last minute, for most individuals it makes sense not to wait until the deadline. A missed RMD can result in a 50% penalty. You don’t want to mess around here. Get that RMD out sooner rather than later.
2. Consider a Conversion. Anyone with a traditional IRA can convert that IRA to a Roth IRA. Does that mean everybody should? No, but it is worth it to at least go through an analysis of whether a conversion is right for you. Each year your tax situation may be different. A conversion may not have made sense in 2016 but maybe it does in 2017. This may be the year that the trade-off of paying taxes now for future tax-free Roth IRA earnings makes sense.
3. Make the Right Moves. Not happy with your current IRA investments? Changing investments may make sense, but if 2017 is your year to move on be sure to make your move the right way. Go with a trustee-to-trustee transfer and have your IRA funds move directly if you are choosing new investments with a new IRA custodian. Avoid having the funds paid to you. Direct transfers between IRAs avoid lots of hassles like the 60-day rollover rule and the once-per year rollover rule.
4. Review your Beneficiary Designation. There is one form that you can use to control the fate of your IRA after your death. That is the IRA beneficiary designation form. If you want to be sure that your hard-earned retirement savings end up in the right hands down the road you will want to be sure that this form is up-to-date and safely in the hands of the IRA custodian. Spend some time in 2017 checking this form to be sure that it accurately reflects your current wishes.
5. Know Your Options. IRA rules can be complicated. Be sure you are not missing out on important benefits by becoming informed of what options are out there. Are you over age 70 ½ and charitably inclined? You may consider a Qualified Charitable Distribution (QCD). Have you thought about a Qualifying Longevity Annuity Contract (QLAC)? Are you looking to use funds in your IRA to purchase your first home? In 2017 make it your plan to know more about what you can do with your IRA.
6. Consult an Expert. You have worked hard to save money in your IRA. Why not take an additional step in 2017 to optimize those savings? Consider consulting a professional. A knowledgeable financial or tax professional can help you stay abreast of all your options and the changes that 2017 is likely to bring.
7. Watch for New Rules. The tax rules, including the IRA rules, are always changing. Every year brings new twists but 2017 is likely to bring more change than usual. A new administration and change of control in Congress will likely have a big impact on your IRA. Stay tuned for the changes ahead.