2019 Retirement Calendar and Checklist to Stay on Track
Believe it or not, the year is slowly coming to a close, and we turn our thoughts to 2019. Maybe you have retired in 2018, or you plan to in the coming year. Many people have no idea what new deadlines are awaiting them.
As the new year begins, most retirees aren’t thinking about tax deadlines and health care. But they need to, since their employers are no longer taking care of these duties. In addition, there are many details such as reviewing estate plans, contributions to charities, retirement portfolios, and family gifts that need to be completed each year.
We’ve put together a list to help you remember these important dates and tasks. While tax laws and Medicare benefits may change, the fact is you still have to deal with them. Use this list to retain peace of mind, knowing that you are tending to everything that is important in a timely fashion.
New in 2019
There are a few key changes to be aware of heading into 2019.
First, Medicare is changing its enrollment periods for Medicare Advantage plans. Currently, you can sign up for, drop, or change an MA plan during the fall open enrollment period, which lasts from October 15 to December 7 each year. This will stay the same. But starting in 2019, the Medicare Advantage Disenrollment Period is going away, replaced by a longer and broader Medicare Advantage Open Enrollment Period that will last from January 1 to March 31, coinciding with the Medicare General Enrollment Period.
In the old MA Disenrollment Period, you could only drop an MA plan and go back to Original Medicare if you were within the first year of signing up. Now, consumers have the chance to sign up in the fall and test drive the plan for three months before deciding whether to keep it, switch plans, or go with Original Medicare in the next year. Or, if they happened to miss the annual enrollment period in the fall, they have another chance to switch plans. It’s more important than ever to know what you need from your health care and if those needs are being satisfied.
On a different retirement-related topic, the Tax Cuts and Jobs Act of 2017 made a major change to Roth IRAs. You are no longer allowed to recharacterize, or reconvert funds. Previously, if you converted to a Roth IRA but were unhappy with the way the stock market played out, or if your income was different than planned, you could recharacterize by October 15 of the tax year after the conversion. Now, once you convert, the account must remain a Roth IRA. While this change is important to keep in mind, be assured that Roths remain a good retirement savings vehicle.
Finally, the Tax Cuts and Jobs Act has in some ways complicated filing taxes, not made it easier. Should you take the increased standard deduction or itemize? Are there ways you can give to charity and still get tax breaks? What about downsizing due to the limitation on deductions for state and local taxes and mortgage interest? These are all questions you will need to keep in mind in 2019 and beyond. For retirees, the amount paid in taxes may make a huge difference. Our calendar has a helpful reminder in February that they need to start organizing tax documents.
Although most people don’t realize it, Medicare operates on a very strict schedule. Seniors need to enroll within a seven-month window surrounding their 65th birthday, unless they are covered by a qualified employer plan. If they are covered by an employer, they have until eight months after that coverage ends to enroll. If they miss both of these periods, they can enroll during the first three months of the year for coverage starting July 1. There is no enrolling outside of this time, and retirees may face penalties if not enrolled.
- Jan. 1–Mar. 31: General Enrollment Period
- Jan. 1–Mar. 31: Medicare Advantage Open Enrollment Period—NEW in 2019
- Oct. 15–Dec. 7: Medicare Advantage and drug plan open enrollment
- Nov. 1–Dec. 15: Affordable Care Act open enrollment
Retirees need to file income taxes even though they no longer receive a salary. Distributions from investment accounts and Social Security might all be taxable, depending on their particular situation. Retirees may be surprised to discover that they need to file taxes not once a year, but four times.
NOTE: Be sure you recalculate how much to pay, now that tax brackets have shifted.
- Jan. 15: Estimated taxes for Q4 of 2018 due
- Apr. 1: Last day to take first IRA RMD without penalty
- Apr. 15: File income taxes or apply for extension (Taxpayers in Maine and Massachusetts have until Apr. 16 due to Patriots Day.)
- Apr. 15: Estimated taxes for Q1 due (Taxpayers in Maine and Massachusetts have until Apr. 16 due to Patriots Day.)
- June 17: Estimated taxes for Q2 due
- Sept. 16: Estimated taxes for Q3 due
- Sept. 30: Last day to determine beneficiaries after an IRA owner’s death
- Oct. 1: Extended trust and estate taxes due
- Dec. 31: Last day for stocks, RMDs, itemized deductions, gifts to count for 2019 taxes
In addition to yearly dates, there are quite a few birthday milestones that mark when retirees are eligible for certain benefits or are required to take action. These age-related markers do not change in 2019.
- Age 55: Penalty-free distributions allowed from 401(k) if retired
- Age 59½: Penalty-free distributions allowed from IRAs and qualified plans, and Roth IRAs at least five years old
- Age 60: Can apply for early Social Security under spouse’s earnings record
- Age 62: Can apply for early Social Security under own earnings record (benefits reduced)
- Age 65: Apply for Medicare (Parts A and B) beginning three months before birthday
- Age 66-67: Full retirement age for unreduced Social Security benefits
- Age 70: Apply for Social Security for maximum benefits
- Age 70½: Must start IRA required minimum distributions
Final quarter tasks
The end of the year is a busy financial time. For retirees, that period becomes even more important. Accounts need to be reviewed and actions taken so that you aren’t penalized the following year. And you need to evaluate income levels to avoid tax liabilities and increased Medicare premiums. Starting in September, work with your financial advisor to reflect on the year behind and strategize for the year to come. Here are some tasks you must tackle:
- Project income for 2019 and 2020
- Review unrealized investment gains and losses
- Collect cost-basis information on sold investments
- Review sales of appreciated property
- Review potential credits and deductions
- Track donations to charity
- Take required minimum distributions
- Review Medicare enrollment options
- Review and fund trusts
- Contribute to college education accounts
- Gift cash to family
- Review any gifting plans
And finally, retirees need to do an annual review. As people age, it becomes even more important to have procedures in place for incapacitation or health care crises. On the brighter side, retirees need to make sure that their income will remain steady for the years to come. Here is a list of what retirees must do at least once a year, and with more urgency than in earlier life stages.
- Review and update health care directive/proxy, power of attorney, will, and trusts
- Review estate plan and letter of intent
- Adjust investment portfolios as retirement needs change
- Review beneficiaries on all pensions, IRAs, annuities, life insurance, investments, bank accounts, CDs, etc.
- Decide which trusts can save on current taxes, reduce estate taxes, and benefit heirs and charities
- Discuss potential gifting to families or charities
Nothing stays the same forever, and retirement planning is no different. Currently Congress is looking at a series of changes to 401(k) plans, including reducing costs for small business, making it less risky for employers to offer guaranteed income annuities, and requiring plans to annually show workers how long their funds would last in the form of an annuity.
Other proposals include changes to required minimum distributions (RMDs). Currently taxpayers cannot contribute to an IRA after age 70½, and have to begin taking RMDs. That age limit might be lifted or removed entirely.
In any case, you will need to stay tuned to news from Washington to see if any measures pass and how they affect you.
For many people, planning for retirement is the main reason they come to a financial advisor. They want smart investment and Social Security advice in order to have many years of relaxation without having to worry about money.
Unfortunately, the world doesn’t work that way. Even after retirement, there is plenty of room for error when it comes to tax filing dates, RMDs, Medicare, and more. Make sure you are prepared for all you need to do in 2019 and beyond. It’s one more way you’ll achieve a peace of mind.