It's That Time of the Year Again

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The start of a new year presents a good time to revisit your retirement goals to make sure you are on track and your beneficiary designations are up to date. It’s also a good time to make sure you are aware of important information, dates, and deadlines related to tax filing.

 

IRA and Coverdell ESA distributions

 

  • If you took a distribution from your Traditional, Rollover, Roth, SEP, or SIMPLE IRA in 2016, or converted your IRA to a Roth IRA, you will receive a 1099-R tax form by January 31, 2017. 
  • Distributions from IRAs are generally reportable on your tax return, even if you subsequently rolled over the distribution into an IRA or other retirement plan, or if any portion of the distribution was attributable to an after-tax contribution. You should refer to the official IRS instructions for Form 1040 or 1040A, or consult your tax advisor for more information. 
  • If you took a distribution from your child’s Coverdell ESA in 2016, you will receive a 1099-Q tax form by January 31, 2017. 

 

Required minimum distributions (RMDs)

 

  • If you are over age 70½ and hold a Traditional, Rollover, SEP, or SIMPLE IRA, you will receive an RMD reminder letter by January 31, 2017. This letter will provide the amount you will need to withdraw from your retirement account by December 31, 2017. You can use our easy, online IRA distribution form to withdraw the necessary amount in a lump sum or installment payments, or upgrade to a Complete IRA to receive check-writing, debit card, and bill pay privileges.

 

Direct deposit your tax refund

 

  • Want a quicker way to receive your tax refund? If you are expecting a federal or state tax refund, you can have your tax refunds directly deposited into your E*TRADE Securities brokerage account or IRA. Simply follow the instructions for "Refund" on your federal or state tax return form. 
  • If deposited into an IRA, the refund will automatically be coded as a current year contribution. 
  • Most electronically deposited refunds are received within 7–10 days. You don’t need to worry about losing the check or making a special trip to the bank to make a deposit.

 

IRA and Coverdell ESA contribution limits and deadlines

 

  • The deadline to set up and contribute to a 2016 IRA is April 18, 2017. This is a postmark deadline. As long as your new account application and/or contribution is postmarked by April 18th (no extensions), it can be applied to the previous tax year.
  • If you are under age 50, you can contribute up to $5,500 for 2016 ($6,500 if over age 50). You may want to consider funding your 2016 IRA early. Contributing to an IRA in January can provide up to 3 additional months of tax-deferred growth potential, rather than waiting until April.
  • You also have until April 18, 2017 to set up and contribute up to $2,000 to a Coverdell ESA for 2016. Remember that Coverdell ESA withdrawals, unlike 529 withdrawals, can be used for K–12 expenses, as well as post-secondary expenses.

A new year give us an opportunity to make a fresh start. Remember, it’s never too late to start saving for retirement. Make it your new year’s resolution to spend some time revisiting your retirement goals with our Retirement Planning Calculator to get back or stay on track.