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Important Tax Dates for Retirees This Spring 2016

Posted on: April 4th, 2016
tax deadlinesRetirees often cover living and healthcare expenses on a fixed income. Opportunities to minimize taxes and avoid penalties help seniors to preserve assets for their needs and to pass on to loved ones. A few important tax rules and some recent tax changes should prompt many retirees to mark their calendars. The tax rules noted below have deadlines in the spring of 2016, and if they are missed they could prompt retirement account penalties, loss of some Social Security benefits, and other issues.

Our tax attorneys in Chapel Hill encourage others to inform retirees in their lives about these important deadlines so that they are not missed. Please share this list with friends and family as time is of the essence:
April 1 – Initial RMD Deadline: Individuals who turned 70 ½ during the 2015 tax year have until April 1 to take the first Required Minimum Distribution (RMD) from their 401(k) or Individual Retirement Account (IRA). Those with a working retirement are exempt from this rule, unless they own 5 percent or more of the company they are working for. Our tax attorneys review what you can do if you miss the RMD deadline.
Penalty: 50% of the missed RMD.

April 18 – IRA Contribution Deadline: IRA account owners have until this date to make contributions that count for the 2015 tax year. Review the retirement contribution limits for 2015. Workers 50 and older are eligible to make an additional “catch-up” contribution in some cases.
Penalty: Lost tax deduction (depending on the type of IRA) and missed opportunity for IRA growth.

April 30 – “File and Suspend” Social Security Deadline: Last November, President Obama signed the Bipartisan Budget Act of 2015 into law. The provisions change several Social Security rules, one being the voluntary suspension of benefits. Suspension of benefits might be a useful strategy for preserving spousal benefits or the right to file for retroactive benefits. Individuals who are not already taking benefits and who will be age 66 or older on May 1, 2016 are eligible for this deadline.
Penalty: Lost opportunity to increase Social Security benefits.

Update your calendars and let us know if you have any questions about these deadlines and benefits.

By Attorney Samantha Reichle

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