Downhill Adventures

We all take different routes to climb the mountain we call life.  Some take the beaten path, some are trailblazers, and some may take the lift.  Whatever your path up may be, we hope you enjoy the descent.  Here are some important “turns,” a.k.a. age, you should be aware of as you make your way down:

Turn ‘50’ – Age eligible for additional annual retirement catch-up contributions in 2021: 

·       SEP/IRA/Roth allows $1,000 or total annual contribution of $7,000. 

·       SIMPLE IRA allows $3,000 or total annual contribution of $16,500.

·       401(k) and 403(b) plans allow $6,500 or total annual contribution of $26,000. 

Turn ‘55’ – Age eligible for additional annual High Deductible Health Spending Account (HSA) catch-up contributions of $1,000. In 2021, total contribution for individuals (55+) are $4,600 or $8,200 for a family HSA.

Turn ‘59½’ – Age eligible to withdrawal from 401k and IRA without incurring a 10% penalty, Rule 72(t).

Turn ‘62’ – Earliest Age eligible to receive Social Security benefits: 

·       Reduces benefits by 25% to 30% if taken before Full Retirement Age (66/67).

·       Additional Resource: https://www.ssa.gov/OACT/quickcalc/early_late.html

Turn ‘65’ – Age eligible for Medicare and Medicare Part D.  Monthly premiums are based on filing status and income. In 2021, monthly Medicare premiums ranged from $115.48 to $504.9 plus $12.30 to $77.10 for Part D. 

Turn ‘66’ (born 1959 or earlier) –or– Turn ‘67’ (born 1960 or later) – Age to achieve Social Security Full Retirement Age (FRA): 

·       Those born in 1955 to 1959 add 2 months for each year after 1954 to reach Full Retirement Age.

·       Each year you delay claiming benefits past FRA, increases credits earned and monthly benefit by ~8% each year, up to age 70.

Turn ‘70’ – Age to claim Social Security with additional credits and increased monthly benefit.

Turn ‘70½’ (born before 7/1/1949) –or–

Turn ‘72’ (born after 6/30/1949) – Age the first Required Minimum Distribution (RMD) is due:

·       April 1st – Date initial distribution to be made following year after age 70 ½ or 72. 

·       December 31st – Date subsequent RMDs must be made by each year, beginning with the calendar year containing your required beginning date.

Required Minimum Distributions Apply to:

·       IRAs, including Traditional, SEPs and SIMPLE

·       401(k), 403(b) post-1987 contributions, 457(b), Profit-Sharing and other Defined Contribution plans.

·       Can delay RMD for these if you’re still employed by the plan sponsor until you retire, unless you’re a 5%+ owner of business sponsoring plan

RMD Notes:

• Roth IRAs currently do not have RMDs.

• You can withdraw more than the RMD. 

• If you do not withdraw the RMD, subjects you to an additional tax equal to 50% of the undistributed RMD.

We hope you continue to enjoy the journey!  Our goal is help you through any “turn” or milestone. These are just a few key points to assist you in your path to success.  Reach out to us with any trust, tax, financial planning, or investment questions.  

Bio

Krystal is our Financial Planning Director and Portfolio Manager who received her Bachelor of Science in Industrial Engineering with minors in business administration and mathematics. While working full time, she completed her MBA at the University of New Mexico Anderson School of Management prior to pursing her CERTIFIED FINANCIAL PLANNER™ certification.