When year-end approaches, most of us focus on taking care of last-minute tax related items for the year and preparing for the upcoming tax season. However, procrastination can result in missed opportunities and, in some cases, penalties for missing deadlines. To help you stay on top of year-end retirement matters, here is a list of related items that must be completed by year-end.

1. Establishing a Qualified Plan
Qualified plans that operate on a calendar year basis must be established by December 31 of the year for which contributions are to be deducted. This includes completing the necessary documentation and notifying employees about the plan. Contributions may be made by the employer's tax-filing deadline, including extensions. (For more information about establishing this type of plane, see the Qualified Plan Tutorial.)

2. Convert Roth IRAs
Roth IRA conversions for a year must be completed by December 31 of that year.

A Roth conversion may be accomplished in one of three ways:

1. Conversion within the same financial institution
This kind of conversion takes place if the non-Roth retirement account and Roth IRAs are maintained at the same financial institution. If the delivering account is a non-Roth IRA, the custodian may either require the IRA owner to move the assets from the non-Roth IRA to the Roth IRA, or may change the non-Roth IRA to a Roth IRA to accomplish the conversion. For qualified, 403(b) and governmental 457(b) plans, the assets must be moved to a Roth IRA as changing the account to a Roth IRA is not permitted. (For more insight, check out The 4-1-1 On 457 Plans and The Top 9 Benefits Of A 403(b) Plan.)

2. Trustee-to-trustee transfer
Here the conversion occurs between two financial institutions. Generally, the Roth IRA owner will instruct the Roth IRA custodian to submit a request to the non-Roth IRA custodian or plan (qualified, 403(b) or governmental 457(b) plan) trustee to deliver the assets to the Roth IRA. To ensure proper tax reporting, the instructions should clearly indicate that the transaction must be processed as a Roth IRA conversion. (For more insight, read The Simple Tax Math Of Roth Conversions.)

3. Distribution and rollover (60-days)
A Roth conversion may also be accomplished by means of a distribution and 60-day rollover. The Roth IRA owner may distribute the assets from the non-Roth retirement account and rollover the assets within 60 days to a Roth IRA.

The Roth conversion applies to the year in which the assets are distributed from the non-Roth retirement account. For instance, assume you convert your traditional IRA by means of a 60-day rollover, distribute the assets in December 2013 and roll over the amount to your Roth IRA in February 2014. The conversion is applicable to 2013 and must be reported on your income tax return for 2013. The tax-reporting forms will be issued for the year the applicable transaction occurs; therefore, your custodian should mail your year-2013 Form 1099-R by January 31, 2014, and your 2014 Form 5498 should be mailed by May 31, 2015.

Be sure to check the tax-reporting documents you receive for your Roth conversion. If you are unsure of the tax reporting requirements, consult with your tax professional. You may also want to check the activity and description on your account statement prior to receiving these forms, so that you are able to resolve any discrepancy with your custodian/trustee before your tax forms are issued.

3. Make Required Minimum Distributions

If you reached age 70.5 prior to the applicable calendar year, you must distribute your required minimum distribution (RMD) by December 31 of that year. If you are an IRA owner who is subject to this requirement, be sure to contact your IRA custodian/trustee as soon as possible in order to help ensure that the that funds will be distributed by December 31, as some custodians/trustees require IRA owners to request their RMDs by a deadline prior to December 31. To determine whether an RMD amount should be distributed this year, qualified plan participants must consult with their employers or plan administrators, as some plans allow participants to defer starting RMDs until after retirement, even if this occurs after age 70.5. (For more insight, see Strategic Ways To Distribute Your RMD.)

If you are a beneficiary who is required to distribute retirement assets using the life-expectancy method, you may need to distribute a minimum by December 31. (For more insight, see How should I distribute my inherited Roth IRA?)

Talk to your tax professional, employer and financial service providers about these and other deadlines and financial matters that require action by the end of the year, as well as for next year. Taking care of these items will help ensure a smooth financial transition from year to year and give you an upper hand with your financial planning and tax preparation.

Related Articles
  1. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  2. Professionals

    How to Protect Retirement and Help Adult Kids

    Parents can both protect their retirement money and help their adult kids. Here's how.
  3. Retirement

    10 Ways to Save Your Retirement: It's Not Too Late

    It's not too late to start saving for your retirement, even if you took longer to start thinking about it and doing something about it.
  4. Investing

    10 Ways to Effectively Save for the Future

    Savings is as crucial as ever, as we deal with life changes and our needs for the future. Here are some essential steps to get started, now.
  5. Professionals

    How to Protect Your Portfolio from a Market Crash

    Although market crashes are usually bad news for your portfolio, there are several ways to minimize losses or even profit outright from market movement.
  6. Professionals

    Why Women Are Underprepared for a Spouse’s Death

    Women are typically less prepared for the death of a spouse than men. An advisor can help mitigate some of the financial burdens widows may end up facing.
  7. Retirement

    How Robo-Advisors Can Help You and Your Portfolio

    Robo-advisors can add a layer of affordable help and insight to most people's portfolio management efforts, especially as the market continues to mature.
  8. Professionals

    3 Benefits of Working Longer (and Retiring Later)

    There are many reasons why folks in their 60s may want to keep working until at least age 70. Here are three.
  9. Retirement

    What Does It Cost to Retire in Costa Rica?

    Tally up the costs associated with taking your retirement in Costa Rica, and determine whether you have what it takes to live in paradise.
  10. Retirement

    How to Decide Where to Live in Retirement

    Here's a guide to help you decide where you want to live after retirement.
  1. How can I determine if a longevity annuity is right for me?

    A longevity annuity may be right for an individual if, based on his current health and a family history of longevity, he ... Read Full Answer >>
  2. How does a Roth IRA grow over time?

    Your Roth IRA account grows over time thanks to two funding sources: contributions and earnings. While your contributions ... Read Full Answer >>
  3. Can my 401(k) be seized or garnished?

    As long as your retirement funds are held in your 401(k) and you do not take them as distributions, your 401(k) cannot be ... Read Full Answer >>
  4. Can my IRA be taken in a lawsuit?

    Whether your IRA can be taken in a lawsuit depends largely on your state of residence and the judgment in question. There ... Read Full Answer >>
  5. Are mutual funds considered retirement accounts?

    Unlike a 401(k) or Individual Retirement Account (IRA), mutual funds are not classified as retirement accounts. Employers ... Read Full Answer >>
  6. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!