Urgent Deadline Alert: IRS 2024 Guidelines Every U.S. Retiree Should Be Aware Of

The Internal Revenue Service (IRS) reminds retirees to make required withdrawals from their retirement plans. This is because these retirement plans have a year-end deadline. Therefore, it is essential retirees withdraw what is necessary before the deadline.

This warning is particularly important for retirees aged 73 or older. Do not forget that this deadline is not just for individual retirement arrangements (popularly known as IRAs), but also for other retirement plans. The IRS also emphasized the updates that were introduced by the SECURE 2.0 Act.

Why should retirees aged 73 or older take the required minimum distributions set by the IRS?

According to the Internal Revenue Service, a required minimum distribution (RMDs) is the amount of money that retirees who have IRA accounts or other retirement plans must withdraw every year.

For your information, the IRS considers these distributions or withdrawals taxable income. Hence, you may have to face penalties if these withdrawals are not taken when you must.

This means you cannot keep retirement funds in your retirement plan account forever. In general, retirees have to take distributions from their IRAs SEP IRA, SIMPLE IRA, or other retirement savings plan account when they turn 73 years old.

What does the IRS say about Roth IRAs?

Actually, the Internal Revenue Service claims that you are not required to take distributions from Roth IRAs. It is the same thing for Designated ROth accounts in a 403(b) or 401(k plan).

Of course, this is as long as the account owner is alive. Nevertheless, if you are a beneficiary of a Roth IRA or even a Designated Roth account, there will be required minimum distributions conditions.

Hence, you will have to follow these withdrawal rules if you are a beneficiary. Do not forget that RMD is just the minimum amount of money you must take out every year. Of course, you can get more money if you need to as long as you pay the taxes the IRS set if it is taxable income.

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As 2024 approaches, the IRS is sending a strong message to U.S. retirees: there are critical deadlines to meet before the year ends. Whether you’re receiving Social Security, managing retirement funds, or planning for your taxes, staying informed and proactive is essential to avoid unnecessary penalties or missed opportunities. Here’s what every retiree needs to know about IRS guidelines for 2024.

1. Required Minimum Distributions (RMDs)

If you are 73 or older in 2024, the IRS requires you to begin taking Required Minimum Distributions (RMDs) from your traditional IRAs and 401(k) accounts. This rule applies to all tax-deferred retirement accounts, including those held by employers and individual retirement plans. The deadline to take your first RMD is April 1, 2024, but be aware that if you wait until this date, you will need to take two RMDs in 2024 — one for the previous year and one for the current year.

Missing the RMD deadline could result in severe penalties, up to 50% of the amount you were required to withdraw. To avoid this, it’s critical to track your distributions and plan accordingly.

2. Tax Filing and Payment Deadlines

Retirees who file their taxes early in the year will want to be aware of the filing deadlines. April 15, 2024, is the standard deadline for filing your tax return. However, for those receiving Social Security benefits, pension distributions, or income from retirement accounts, the IRS may be expecting additional documentation.

Ensure that you file on time to avoid any late fees or interest charges. The IRS does offer extensions, but you must file an extension by the original deadline to receive this relief.

3. Social Security Income Taxes

For retirees drawing Social Security benefits, it’s essential to understand how these payments are taxed. In some cases, Social Security income may be taxable depending on your overall income. If your combined income (adjusted gross income + nontaxable interest + half of your Social Security benefits) exceeds certain thresholds, you may owe federal taxes on your benefits.

As of 2024, up to 85% of your Social Security income could be subject to taxation if your income is high enough. The IRS guidelines for this tax threshold are updated annually, so it’s important to stay on top of any changes in your financial situation and adjust your withholding accordingly.

4. Tax-Advantaged Accounts and Contributions

Another key deadline for retirees in 2024 involves tax-advantaged retirement accounts like IRAs and Roth IRAs. The IRS allows you to contribute up to $7,000 to an IRA if you’re 50 or older, as long as you do so by the tax filing deadline, which is April 15, 2024. However, keep in mind that Roth IRA contributions may not be allowed if your income exceeds certain thresholds.

For retirees still working and participating in employer-sponsored retirement plans, the IRS also allows for catch-up contributions of up to $7,500 for those aged 50 and older. However, the deadline for contributions is tied to your employer’s plan and may differ slightly.

5. Tax Withholding Adjustments

Many retirees overlook the importance of adjusting their tax withholding based on their current retirement income. If you’re still earning income through a part-time job, rental properties, or investment income, you may want to make adjustments to avoid being caught with a large tax bill at the end of the year.

The IRS recommends checking your withholding regularly using the IRS Withholding Estimator tool to avoid surprises in your tax return. Be sure to complete any necessary paperwork, such as submitting a revised Form W-4, to ensure you’re withholding enough taxes.

6. Healthcare and Medical Expense Deductions

For retirees, healthcare expenses can become a significant part of your financial picture. If you itemize your deductions, you may be able to deduct certain unreimbursed medical expenses that exceed 7.5% of your adjusted gross income. This includes out-of-pocket costs for doctor’s visits, prescription medications, and long-term care.

Additionally, if you’re enrolled in a Health Savings Account (HSA), you have until April 15, 2024, to make contributions for the 2024 tax year. You can contribute up to $4,850 if you’re over 55, which can reduce your taxable income.

7. Potential Impact of Tax Law Changes

The IRS periodically updates tax laws, which may impact the way retirees are taxed. As of 2024, several provisions may affect retirees, including adjustments to income thresholds, tax brackets, and deductions. For example, new tax laws could influence the taxation of retirement distributions or affect the way investment income is taxed.

Stay updated on any changes that could impact your financial planning and tax strategy. It’s wise to consult with a tax professional to navigate these potential changes and ensure you’re in full compliance with IRS guidelines.

Conclusion

U.S. retirees have several important deadlines and guidelines to follow in 2024 to stay on track with IRS requirements. From RMDs to tax filings and contribution limits, being aware of these deadlines will help you avoid penalties and ensure you make the most of your retirement benefits.

As always, it’s recommended to consult with a tax professional or financial advisor to tailor these guidelines to your specific financial situation and ensure you’re fully prepared for the year ahead.