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We want to remind you about several fast approaching year-end account actions you may be contemplating. These may have tax implications for 2024 and deadline dates by which action must be taken for Charles Schwab (Schwab) to meet the calendar year 2024 IRS requirements. Since December 31 falls on a Tuesday this year, and as it is treated as a full business day at Schwab, that will be the last day for year-end processing. Requests received after December 31, 2024, will be recorded for tax year 2025.
We ask that all year-end requests intended to be processed and recorded for tax year 2024 be submitted in good order to us by December 20, 2024 so we may forward to Schwab for processing by year-end.
■ For Account Withdrawals:
Validate that any information provided for third-party disbursements, such as to charitable organizations, is accurate, including the recipient’s current address and the delivery instructions. This will help prevent returned and voided checks due to uncashed checks. We also encourage you to work with the receiving party to ensure any checks issued were received by that party and will be cashed within six months to prevent any issues or delays with those disbursements.
Ensure that accurate information be provided for the charity in question to result in accurate tax reporting. If a check issued in 2024 is returned by the US Post Office for an invalid address, we must process a replacement check by January 31, 2025, to ensure the distribution can still be recorded for tax year 2024 on IRS Form 1099-R. If a check disbursement is returned and not resolved by January 31, 2025, we will need to correct any related 1099-R reporting to ensure the disbursement in question is not recorded on the 1099-R.
■ Deadline for Roth IRA Conversion Processing Requests:
A Roth Conversion Form in good order must be received by December 20, 2024. Please contact us for this form if you plan to execute a Roth conversion. Forms received after that date will be processed on a best-efforts basis. Note, Roth Conversions are irrevocable in nature and cannot be reversed once processed. As other tax consequences may result, we recommend you first consult a tax advisor.
■ Deadline for Establishing a 2024 QRP:
Qualified Retirement Plans for 2024 must be established by the plan sponsor’s tax filing deadline plus extensions.
■ 2024 Required Minimum Distributions (RMDs):
If you’re tuning age 73 this year, or are older, you have likely initiated withdrawals towards satisfying your required distributions. This is a reminder of the withdrawal requirement. Be careful to consider all your qualified accounts when calculating your annual required minimum distributions (RMD’s) from your tax-deferred retirement account(s), such as IRA’s. The penalty for not taking your RMD can be pretty steep: The IRA will levy a penalty amounting to 25% of the sum you should have withdrawn.
On a cautionary note, ’tis also the season for the scammers and fraudsters. When in doubt verify!
■ Fraudsters
Phishing/Email Account Compromise – Scammers send deceptive emails, texts, or messages designed to trick recipients into clicking malicious links or revealing sensitive information, often by impersonating reputable organizations. Additionally, thieves may attempt to gain access to email accounts and use them to intercept financial communications or initiate fraudulent requests. Remember to always verbally verify all money movement.
Please let us know if you are thinking of any investment account or financial planning for year end. We are happy to help.
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