Self-Directed IRA

SDIRA End of Year Checklist

SDIRA End of Year Checklist

As the weather gets cooler and we inch closer to the holidays, many people are preparing for the end of the year to get a head start on 2023. For IRA holders, a lot happens at the end of every year, and it’s important to stay on top of all requirements and deadlines that might pertain to your account. This blog is your one-stop checklist that provides some helpful resources and updates for IRA holders as they move into the new year. This is a very busy time of the year – not only for the holidays – but for future financial planning, and we hope these resources can offer help to you as the year ends!

Roth Conversions

Are you thinking of doing a Roth Conversion for the tax year 2022? To convert for this tax year, the deadline is December 31, 2022. Please note the last business day of the year is December 30th. If you’ve been considering a Roth Conversion, this might be your last chance. To learn more about Roth Conversion, you can watch a helpful video HERE.

Solo 401k Establishment Deadlines

Since the creation of the Solo 401(k) in 2002, self-employed individuals and small business owners have been able to invest and work towards a secure retirement. If you’re looking to establish a Solo 401(k), you must have opened your Solo 401(k) by December 31st, 2022, in order to make contributions for the 2022 tax year. The Individual or Solo 401(k) must be established by December 31st of the year you wish to contribute. You can contribute up to $61,000 for 2022.

2022 Contributions

While we’re on the subject of contributions, have you made your contribution for 2022 yet? Finish your year off right by making contributions to your IRA today. And here is some news to look forward to – contribution limits for 2023 are increasing! You can read more about the 2023 contribution limits for all accounts HERE.

Required Minimum Distribution (RMD) Deadline

Your required minimum distribution (RMD) is the minimum amount you must withdraw from your account each year. Generally, you must start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, and other types of retirement plans when you reach age 72 (or after inheriting any IRA). The amount of the required minimum distribution is calculated annually, based on the previous year’s fair market value as of December 31st and the age (and life expectancy) of the account holder (if you inherited an IRA, it may be measured by your life expectancy). You are always free to withdraw more than the required amount, but failure to satisfy your RMD may trigger tax penalties. Your first RMD must be taken no later than April 1st of the year following the calendar year in which you turn age 72. Subsequent RMDs must be taken by December 31st of each year.

Qualified Charitable Distributions (QCD)

If you would like to make a qualified charitable distribution (QCD), you have until the end of the year. A QCD is an otherwise taxable distribution from an IRA owned by an individual who is age 70 ½ or over that is paid directly from the IRA to a qualified charity. If you would like to make a QCD, your distribution follows the same rules as other accounts and must be satisfied by December 31st. Here are some helpful Qualified Charitable Distribution takeaways you should know:

• QCDs may satisfy all or part of a taxpayers RMD.

• QCD requires a direct transfer to the qualifying charity.

• QCDs can be done after 70.5, RMDS begin at 72.

• QCDs are reported in the year they are made.

• QCDs are not reflected as tax-free on the IRS form 1099-R. It will appear as a normal distribution. It is up to the client to notify tax preparer that some or all of that distribution was a QCD. It is recommended that individuals receive acknowledgement of the donation to claim a deduction.

• The charity must be a 501(c ) (3) organization. Some charities that do not qualify or private foundations, donor-advised funds, or supporting organizations.


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