Key 2016 dates for retired clients

Make sure your clients comply with deadlines for taxes, Medicare, Social Security and retirement distributions

Jan 8, 2016 @ 10:06 am

By Mary Beth Franklin

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Part of the job of financial advisers is to help their clients organize their finances and remind them of critical deadlines throughout the year. Here's a rundown of key dates for your retired clients in 2016 to ensure they comply with deadlines for filing taxes, enrolling in Medicare drug plans, claiming Social Security and taking retirement distributions.

Jan. 1
Claim spousal benefits
Clients who are 62 or older by Jan. 1, 2016 retain the right to claim only spousal benefits when they file for Social Security at age 66 or later, allowing their own retirement benefit to grow up to age 70, assuming the other spouse has already filed for benefits. Under a new law, younger clients lose this valuable claiming option.
Jan. 15
Pay quarterly federal taxes
Many retirees pay their federal taxes quarterly. For those who file estimated taxes, the final payment for 2015 is due on Jan. 15. They can skip the final estimated payment if they file their 2015 federal tax return and pay the entire balance due by Feb. 1, 2016. Clients can reduce or eliminate their quarterly tax obligations by having income taxes withheld from their Social Security benefits, pensions and retirement plan distributions.
April 1
Take required minimum distribution
Clients who turned 70 in 2015 must take their first required minimum distribution from their IRA, 401(k) or other traditional retirement accounts by April 1, 2016. But if they wait until then, they will have to take a second distribution by Dec. 31, 2016, and by each Dec. 31 thereafter. The penalty for missing an RMD is 50% of the amount that was not withdrawn.
April 18
Federal tax filing deadline
The federal tax filing deadline is three days later than usual this year because of the celebration of Emancipation Day on April 15 in Washington, D.C. Some state tax filing deadlines differ. A six-month extension is available to file a federal tax return, but any taxes owed are still due by April 18. It's also the deadline for the first quarterly estimated federal tax payment for 2016.
April 30
Deadline to file & suspend Social Security benefits
The deadline to file and suspend Social Security benefits under existing rules for clients who are 66 or older is May 1, 2016. That allows workers to trigger benefits for a spouse while their own retirement benefits continue to grow by 8% per year up to age 70. Beginning May 1, no one will be able to collect Social Security benefits during a suspension period, and the ability to request a lump sum payout of suspended benefits will disappear.
June 15
Deadline for quarterly taxes
Second quarterly estimated tax payment due.
Sept. 15
Deadline for quarterly taxes
Third quarterly estimated tax payment due.
Oct. 15
Open Medicare enrollment begins
Open enrollment begins for Medicare Part D prescription drug plans and all-inclusive Medicare Advantage plans, and ends Dec. 7. Plans can change their list of covered drugs and prices from year to year, so retirees should review their coverage and shop for best-priced plans.
Oct. 17
Six-month tax return extension deadline; Last call to undo 2015 Roth Conversions
If you filed for a six-month extension, your 2015 income tax return is due Oct. 17 — two days later than usual because the normal Oct. 15 deadline falls on a Saturday. It is also your last chance to undo a 2015 Roth Conversion. If you converted a traditional IRA to a Roth during 2015 and paid tax on the conversion with your 2015 return, Oct. 17, 2016 is the deadline for recharacterizing the conversion. Doing so could save you money if the IRA has lost money since the time of the original conversion.
Dec. 31
Deadline for end-of-year tax moves
A crucial deadline for several tax moves including taking annual required minimum distributions from retirement plans, making charitable donations that qualify for a tax deduction if you itemize, and selling depreciated securities that can be used to offset investment gains.
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