As the year draws to a close, key deadlines to take advantage of money-saving opportunities are fast approaching. From enrolling in Medicare to taking minimum distributions to superfunding a 529 plan, there are rules and requirements you need to be aware of before the year ends.
As 2024 comes to a close, here are six deadlines to consider when thinking about your benefits and finances.
1. IRA conversions. Deadline: December 31
The deadline for converting a traditional IRA to a Roth IRA is Dec. 31.
A Roth conversion transfers funds from a traditional IRA or 401(k) to a Roth account, with the converted amount subject to income tax. Savers and retirees can use this strategy to reduce their exposure to the income related monthly adjustment amount (IRMAA) and benefit from tax-free withdrawals in retirement. These surcharges apply to enrollees in Original Medicare and Medicare Advantage plans.
The standard monthly Medicare Part B premium is $185.00 in 2025. But that could be higher with a 2023 MAGI above $106,000 for individuals or $212,000 for married couples filing jointly. The monthly surcharge for Part B premiums ranges from $74.00 to $443.90 and the range for Part D is from $13.70 to $85.50.
The Social Security Administration determines your eligibility for the IRMAA based on your MAGI from two years prior. The income you have when you are 63 will determine your Medicare costs when you turn 65. Since Roth conversions can boost income, they can also affect income-related monthly adjustment amounts (IRMAA), for Medicare Part B and Part D premiums.
So if you did a Roth conversion at age 63, that would be included in the IRMAA income calculation at age 65 when you are eligible to enroll in Medicare. By doing a Roth conversion at or after 63 and taking the IRMAA hit in the short term, you could put yourself in a position where you avoid IRMAA for the rest of your life.
However, if you get enough Roth conversions done by the time you reach 63, you could avoid IRMAA altogether. Why? Because distributions from Roth IRA are not included in the IRMAA income formula.
If taxes are a concern, you can do a partial conversion. You can convert a portion of your assets over two years or more, thereby spreading out your tax payments. You don't have to convert the entire account at once.
2. Charitable contributions. Deadline: December 31
If you itemize your deductions, it’s possible to deduct up to 60% of adjusted gross income when you make a cash donation to a qualified charity. If you donate appreciated securities, you may be able to deduct 30%. However, you must make contributions by December 31 to get those deductions.
If you don't typically itemize your taxes, you could still get the deduction using a donation strategy called bunching. This strategy calls for clustering charitable deductions in a single year, then skipping the following year or even a few subsequent years.
Donating appreciated securities. Don't wait until the last minute, especially if you're contributing appreciated securities, which take longer to process than cash. Year-end gifts of appreciated stock should be made by Dec. 26, 2024 at the latest, so that your broker has time to transfer the stocks and the receiving broker has time to value the stocks, according to planninggiving.com.
3. Contributions to employer-provided retirement plans. Deadline: December 31
There is still time to make contributions for 2024 to retirement plan accounts — but not much. Many employer-provided retirement accounts require contributions to be made by December 31. Unlike IRAs, which allow you to make contributions for a given year anytime between January 1 and the tax-filing deadline of the following year.
The workplace retirement plans for which contributions must be made on or before December 31 are:
- 401(k)s for solo or employer-provided accounts
- 403(b) plans for employees of public schools and certain tax-exempt organizations
- Governmental 457 plans for state or local government employees and the Thrift Savings Plan (TSP) for federal employees
Check out Kiplinger’s article 10 Retirement Moves to Make Before 2025 to learn more about 2025 contribution limits and other smart financial moves you can make before time runs out.
4. Required minimum distributions (RMDs). Deadline: December 31
One of the most critical year-end withdrawal deadlines concerns required minimum distributions (RMDs) from IRAs and defined contribution plans. Those withdrawals must be made on or before December 31 or the account owner will face a penalty.
Fortunately, the SECURE 2.0 Act reduced the penalty for a missed RMD or incomplete withdrawal to 25% from 50%, and the penalty may be reduced to 10% if the mistake is corrected within two years.
The following retirement plans are subject to RMD rules:
- Traditional IRAs
- Simplified Employee Pension (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE) IRAs
- Defined contribution plans including: 401(k)s, 403(b), 457(b)s, the federal government’s Thrift Savings Plan (TSP)
Though RMDs are in place to prevent retirement accounts from being used as permanent tax shelters or pseudo-trusts for transmitting wealth to beneficiaries, there is no requirement to spend the RMD funds on retirement expenses, or at all. Once distributed, the amount of the RMD can be used for nearly any purpose — except for contributions to a retirement account.
5. 529 contributions. Deadline: December 31
College 529 plans have been steadily growing in popularity due to the many ways the accounts can be used in addition to funding an education. A 529 plan can be a powerful estate planning tool for grandparents to spend down assets and lower estate taxes.
The IRS treats 529 contributions as gifts, which means they may be subject to taxation if contributions are more than $18,000 per year or $36,000 for married couples filing jointly in 2024.
However, 529 plans allow a contributor to superfund five years’ worth of tax-free gifting into a single calendar for a beneficiary. Normally you can gift $18,000 per year using the annual gift tax exclusion amount. With a 529 you can gift $90,000 in one year (or $180,000 if married filing jointly) and avoid gift taxes.
6. Did you miss the Medicare open enrollment deadline on December 7?
Did you miss the December 7 Medicare open enrollment deadline? All is not lost. Depending on the type of coverage you have or reason for missing the deadline, you may still have the opportunity to make changes that will impact your 2025 medical coverage.
If you are enrolled in Original Medicare and missed the Medicare open enrollment period, which runs from October 15 to December 7 each year, you will be automatically re-enrolled in your current plan for the following year. However, you may not be able to make changes to your coverage unless you qualify for a Special Enrollment Period (SEP).
If you qualify for the SEP, you can only change your Part D coverage. You are not able to switch to a Medicare Advantage during an SEP. The Medicare site offers a Q&A on how to qualify for the special enrollment period to give you a general explanation of qualifying circumstances.
If you are enrolled in a Medicare Advantage plan and for any reason you don’t like it, you can change your plan or switch to Original Medicare during the Medicare Advantage Open Enrollment Period (MAOEP) that runs every year from January 1 – March 31. This only applies to people enrolled in Medicare Advantage plans who want to make a change.
Medicare provides a tool to help you compare the costs of different Medicare Advantage and Part D prescription drug plans. The tool lets you see what your out-of-pocket maximum would be for different Medicare Advantage plans, as well as what your specific medications would cost with each plan. The tool can also give you price ranges for Medigap plans available in your area.
Bottom line
The end of the year is traditionally a busy period, filled with holiday planning, traveling, and spending time with family and friends. However, the end of the year can also be a good time to review your financial situation and ensure that you’re on track to meet your goals.
