Checklist of important retirement dates

From Bogleheads
Jump to: navigation, search

This checklist of important retirement dates is a tabulation of important age markers for investment and retirement planning. The list includes age specifications affecting retirement plans, social security, college funding, and health savings accounts.

Age Description
17 Or, a student 18 - 19 years old in no higher than 12th grade. Latest age for a child to collect parent-based Social Security retirement or survivor benefits.[1]
24 Earliest time at which a parent may purchase a savings bond and receive favorable tax treatment on interest if used for child's future qualifying education expenses. [2]
26 Dependent coverage stops for nondisabled adult "children" under their parents' medical insurance.[3]
30 Must fully withdraw any remaining balance from an owned Coverdell Educational Savings Account. [note 1]
32 (32 to 35): The election to waive an unsubsidized qualifying preretirement survivorship annuity of a defined benefit plan.
50 If you are 50 or older by the end of the calendar year: Start catch-up contributions to retirement plans such as SIMPLE IRA, SARSEP, 403(b), 457(b), 401(k) , Roth and Traditional IRAs.[4][note 2]
55 Jan 1 of year you turn 55 - Penalty free 401k withdrawal if you were separated from your employer on or after this date.[5]
55 Employees with an Employee Stock Ownership Plan (ESOP) may diversify up to 25% of company stock if employed at least 10 years. At age 60, up to 50% may be diversified.[note 3]
55 Eligible to make catch-up contribution to one's Health savings account (HSA). [6]
59.5 Withdrawals from IRA, 401k without penalty, with limitations.
59.5 May be possible to do an "in service non-hardship" withdrawal to roll money from pension plan or 401k to an IRA while employed and without a penalty or taxes.
60 The minimum age at which a surviving spouse may claim widow(er)'s Social Security benefits (age 50 if the survivor is disabled.)[7]
62 Eligible for a reverse mortgage under the FHA's Home Equity Conversion Mortgage (HECM) program.[8]
62 Age 62 to 65 or older, possible additional property tax exclusions. Check your local rules. Some jurisdictions do not charge school property taxes after the age of 62 or 65. You may need to apply for this by a specific date.
62 The minimum age to collect Social Security retirement benefits. [9] If you are a surviving spouse, you may collect as early as age 60 with reduced benefits.[10]
63.5 18 months of COBRA insurance will get you to Medicare.
65 Eligible to start Medicare, but apply 3 months before your 65th birthday. Otherwise, Medicare (Part B) and prescription drug coverage (Part D) may cost you more money.[11] You can be entitled to Medicare at an earlier age only if you are entitled to Social Security disability benefits.[12]
65 Your federal standard deduction increases if you are age 65 or older on the last day of the year.[13]
65 The minimum age after which penalty free distributions from a Health Savings Account (HSA) may be taken for any reason.[14] (Tax will still apply in the absence of qualifying medical expenses, but no penalties after this age.)
65+ 65 or older. Social Security recipients at or beyond this age will be automatically enrolled in Medicare Part A and therefore ineligible to contribute to a Health Savings Account.[15][16][17]
65 to 67 Social Security Full Retirement Age (FRA)[18] ranges; if you start collecting benefits at this age, your benefit will not be raised or lowered because of your age.
70 Delaying collection of Social Security retirement benefits beyond 70 does not increase the benefits.[19]
70.5 Starting January 1st of the year in which you reach 70.5, traditional IRA contributions must stop (traditional IRA contributions must end the year before).[20]
70.5 Required Minimum Distributions from some retirement accounts (Special rules for RMDs may apply for pre-1987 403(b) contributions or if still working at 70.5).
85 The latest age at which a Qualified Longevity Annuity Contract (QLAC) within a tax-advantaged retirement plan can begin.[7][21]
85 to 95 Age range at which many non-qualified deferred annuity account balances (both fixed deferred and variable deferred) must be annuitized; refer to specific annuity contract for precise required annuitization age. [note 4]


A Retirement Year Checklist
Here are some factors to consider:

1. Enough income to put money into an IRA.

2. Social Security: (a) to have 40 quarters to qualify (b) to have an additional year of SS income to (slightly) increase SS payouts.

3. Company specific considerations of vacations and bonuses.

4. Getting pay for unused leave this year vs. next year.

5. Ability to maximize this year's 401(k) contributions.

6. Ability to maximize this year's HSA contributions.

7. Using FSA funds.

8. Medical insurance considerations. - For example, retire on 30 June, get 1.5 years of COBRA, and sign for ACA in 2016 when all the dust settles.

9. Housing considerations - It's easier to move in Spring-Summer than in February.

10. Any specific retirement plans - Retire in June and go to Europe for three months.

11. Credit considerations - Get credit while you are a "good risk."

--What factors to consider when setting the [retirement] date, forum discussion


Other retirement milestones

  • 35 years of full time work.

Your Social security benefits are calculated on your top 35 years of earning adjusted for inflation. After 35 years of full time work you will not have any zero years so working more may have minimal impact on your Social security benefits.

Significant financial life events:

  • When your pension and employer retirement plan contributions become vested.
  • When mortgage will be paid off.
  • When children will be in college.
  • When kids move out and become financially independent.
  • Child's wedding as a possible large expense.

Special cases

Money you contributed to a 403(b) before January 1 1987 has special RMD rules that may be to your advantage.

Notes

  1. IRS pub 970 explains:
    Any assets remaining in a Coverdell ESA must be distributed when either one of the following two events occurs.
    • The designated beneficiary reaches age 30. In this case, the remaining assets must be distributed within 30 days after the beneficiary reaches age 30. However, this rule does not apply if the beneficiary is a special needs beneficiary.
    • The designated beneficiary dies before reaching age 30. In this case, the remaining assets must generally be distributed within 30 days after the date of death.
  2. You may start catch-up contributions at 49 if you turn 50 by the end of the year.
  3. ESOP Vesting, Distribution, and Diversification Rules, from the National Center for Employee Ownership (NCEO). Read this article for additional conditions. These are the minimum legal requirements; check your employer's plan.
  4. The California Department of Insurance explains:
    Forced Annuitization: If an annuity is tax-qualified, the annuitant is required to begin minimum required distributions by age 70 ½. Failure to take the required minimum distribution by age 70 ½ will result in a tax penalty. If the annuity is non-qualified, there is no requirement to withdraw the funds at any age except as required by the contract itself.

See also

References

  1. Benefits for Children, from the from the Social Security Administration. Also, 18 or older and disabled. (The disability must have started before age 22.)
  2. See Introduction to Education Savings Bond Program from IRS pub 970
  3. Young Adults and the Affordable Care Act: Protecting Young Adults and Eliminating Burdens on Businesses and Families, from the US Department of Labor
  4. Retirement Topics - Catch-Up Contributions, from the IRS
  5. 401(k) Resource Guide - Plan Participants - General Distribution Rules, from the IRS.
  6. See Contributions section from IRS pub 969
  7. 7.0 7.1 Bogleheads® forum post: Re: Suggestion for the Wiki Checklist of Important Dates
  8. FHA Reverse Mortgages (HECMs) for Consumers, from the U.S. Department of Housing and Urban Development
  9. Full retirement age, from the Social Security Administration
  10. Survivors Benefits, from the SSA.
  11. What you need to know about benefits, from the Social Security Administration
  12. Earliest age to receive Social Security Retirement benefits, from the SSA.
  13. See Standard Deduction Amount from IRS pub 501
  14. "IRS Pub 969". IRS. https://www.irs.gov/publications/p969/ar02.html#en_US_2015_publink1000204081. Retrieved 28 Aug 2016. "Age 65 waiver is under "Distributions From an HSA", then 'Additional tax. Exceptions."
  15. "Original Medicare (Part A and B) Eligibility and Enrollment". Centers for Medicare & Medicaid Services. https://www.cms.gov/medicare/eligibility-and-enrollment/origmedicarepartabeligenrol/index.html. Retrieved 28 Aug 2016.
  16. "IRS Publication 969". IRS. https://www.irs.gov/publications/p969/ar02.html. Retrieved 28 Aug 2016.
  17. "Can I Have a Health Savings Account as Well as Medicare?". AARP. http://www.aarp.org/health/medicare-insurance/info-04-2009/ask_ms_medicare_question_53.html. Retrieved 28 Aug 2016.
  18. Full retirement age, from the Social Security Administration
  19. Benefit amount if Retirement is delayed, from the SSA.
  20. When Can Contributions Be Made?, IRS Publication 590. There is no Roth IRA age limit restriction. Ref: Can You Contribute to a Roth IRA?, IRS Publication 590.
  21. Internal Revenue Bulletin TD 9673, July 21, 2014, viewed August 26, 2016

External links