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Tax and retirement timeline

First National Wealth Management

Tax and retirement timeline

Paula Bindert
Wealth Advisor – Tax Consultant

Are you stashing away the most money possible in your employer’s retirement plan? Contributing the maximum to your individual retirement account (IRA)? What about your Health Savings Account (HSA)?

Do you know when you can and when you are required to access your retirement funds?

Once you turn age 50, certain tax-saving opportunities become available to you. And in the years following, additional opportunities and certain retirement benefits also become available.

Below, we have provided a quick-reference retirement timeline that indicates which ages trigger these tax-saving opportunities. Furthermore, we have outlined important dates for Medicare and Social Security that may help you minimize your taxes and maximize your income — so you can make the most out of your money in retirement.

A middle-aged couple enjoying retirement by hiking a grassy trail.

 

Age 50

Catch-up contributions of $1,000 to IRAs

Workers aged 50 and older can save an additional $1,000 in an IRA, for a total contribution of $7,500 for 2023.

Catch-up contributions of $7,500 to employer 401(k) plans

Employees aged 50 or older can contribute an additional $7,500 to their 401(k) plan, for a total contribution of $30,000 for 2023.

 

Age 55

Catch-up contributions of $1,000 to HSAs

Individuals aged 55 or older are eligible to contribute an additional $1,000 to an HSA, for a total contribution of $4,850 for 2023.

The Rule of 55

If you leave (or lose) your job in the year you turn age 55 or older, you can take penalty-free 401(k) withdrawals from the retirement account associated with your most recent job.

 

Age 59 ½

10% early withdrawal penalty ends

At age 59 ½, you can withdraw funds from an IRA for any reason without incurring the 10% early withdrawal penalty, though you may still owe income tax on the distribution.

 

Age 62

Social Security benefits eligibility begins

If you start receiving benefits at age 62, your benefits will be reduced from your full retirement age monthly benefit.

 

Age 65

Medicare eligibility begins

The initial Medicare enrollment period lasts for seven months, starting three months before you turn age 65 and ending three months after the month you turn age 65.

If you miss this enrollment period, a late enrollment penalty may be applied.

Additional standard deduction for taxpayers

Single filers receive an additional $1,850 standard deduction, which increases the 2023 standard deduction from $13,850 to $15,700.

Married filers on a joint return receive an additional $1,500 standard deduction per taxpayer, which increases the 2023 standard deduction from $27,700 to $30,700 if both spouses are age 65 or older.

 

Age 66–67

Full retirement age for Social Security

If you start receiving benefits at your full retirement age, you will receive 100% of your monthly benefit.

The full retirement age for Social Security depends on the year you were born:

  1. If you were born between 1943 and 1954, your full retirement age is 66.
  2. If you were born between 1955 and 1959, your full retirement age is 66 plus two months for each year after 1954.
  3. If you were born in 1960 or later, your full retirement age is 67.

 

Age 70

No further incentive for waiting to sign up for Social Security

If you delay taking your benefits from your full retirement age up to age 70, you will now receive the biggest possible monthly benefit.

 

Age 70 ½

Qualified Charitable Distributions (QCDs) from your IRA are allowed

You can transfer any amount up to $100,000 each year from your traditional IRA directly to a qualified charity and will not owe income tax on the transaction.

 

Age 73

401(k) and IRA Required Minimum Distributions (RMDs)

RMDs begin for retirees who reach age 72 after December 31, 2022, and reach age 73 before January 1, 2033.

 

Age 75

401(k) and IRA Required Minimum Distributions (RMDs)

RMDs begin for retirees who reach age 74 after December 31, 2032.

 

If you have questions or would like more information on any of these tax- and retirement-related benefits, reach out to me. I would be happy to talk it through with you!

Any comments, insights, or strategies discussed in this article are intended to be general in nature and, therefore, may not be suitable for you and your situation, whatever that may be. Before acting on anything written here, please consult with your attorney, CPA, and/or your financial advisor.

Have questions? We're here to help.

Paula Bindert
CPA

Paula Bindert

Wealth Advisor – Tax Consultant
Adam Cox
JD, MBA

Adam Cox

Executive Vice President and Chief Wealth Management Officer
Maggie Groteluschen
JD, MBA, CTFA

Maggie Groteluschen

Fiduciary Services Manager
Don Rahn
CFP®

Don Rahn

Wealth Advisory Manager
Bryant Henderson
CFP®

Bryant Henderson

Wealth Advisor

Dave Burns

Wealth Advisor
Nick Ratzloff
MBA

Nick Ratzloff

Wealth Advisor
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