Important Year End Retirement Plan Deadlines

Deadline to Contribute to 401(k) and Other Defined Contribution Plans
December 31, 2024

Employee contributions to 401(k) plans (and other plans that involve salary reductions or elective deferrals) must be made by the end of the year. For 2024, the limit is $23,000 or 100% of your compensation, whichever is less. If your plan allows, participants aged 50 or over may contribute an additional $7,500, totaling up to $30,500. Note that your particular plan may have specific limits.

Employer Contribution Deadline for Partnerships and S-Corporations
March 17, 2025, or September 15, 2025

Income tax returns for calendar-year businesses structured as partnerships or S-corporations are due on March 17, 2025. Businesses generally have until their filed tax return date (including extensions) to make employer contributions to retirement plans. Therefore, contributions for the 2024 tax year must be made by March 17, 2025, or September 15, 2025, if the return is extended.

IRA Contribution Deadline
April 15, 2025

Contributions to your traditional IRA or Roth IRA must be made by April 15, 2025, regardless of whether your tax return is extended. For 2024, you may contribute up to $7,000 ($8,000 if age 50 or older) or your taxable compensation for the year, whichever is less. Eligibility and deduction limits apply based on your income level and other retirement plan participation, so consulting your adviser is wise to ensure you’re maximizing benefits.

Important to note that eligibility and deduction limits depend on income and participation in other retirement plans.

Employer Contribution Deadline for C-Corporations and Self-Employed Individuals
April 15, 2025, or October 15, 2025

A calendar-year C-corporation must fund its employer contributions for the 2024 tax year by April 15, 2025, unless the tax return is extended. Self-employed individuals making “employer” contributions to their retirement plan must fund them by the tax return due date or by the extension due date, October 15, 2025.

Required Minimum Distributions (RMD) Deadlines

Annual RMD Deadline
December 31, 2024

If you are 73 or older, remember to take your required minimum distribution by December 31. Failure to do so could result in a 25% penalty on the amount that should have been withdrawn. Consult your adviser to discuss RMD strategies that may benefit your financial situation.

Deadline for First RMD
April 1, 2025

For those who turned 73 in 2024, April 1, 2025, is the deadline for your first RMD. For subsequent years, the RMD is due by December 31. Missing this deadline incurs a penalty, so planning ahead is advised.

Inherited IRAs – It is complicated

If you have inherited an IRA from someone who was already taking RMDs or had reached their required beginning date (age 73 as per the SECURE 2.0 Act starting in 2023), you may be required to take annual RMDs. Remember to withdraw the required amount by December 31, 2024.

For non-spouse beneficiaries who inherited an IRA in 2020 or later, and if the original account holder had reached their required beginning date, your first RMD is due by December 31, 2024. Subsequent RMDs must also be taken by December 31 each year. Missing these deadlines can incur significant penalties, so proactive planning is essential. Important to note the IRS issued Notice 2024-35 to extend relief for certain beneficiaries of inherited IRAs regarding Required Minimum Distributions (RMDs) for the year 2024. This special provision allows you to avoid penalties for not taking RMDs from inherited IRAs this year under specific conditions.

10-Year Rule: Under the SECURE Act, non-spouse beneficiaries generally must deplete the inherited IRA within 10 years of the original owner’s death. If the original owner had started RMDs, you might also be required to take annual distributions during this period.

If you inherited an IRA before January 1, 2020, you are subject to the rules that were in place prior to the enactment of the SECURE Act of 2019. This means you can continue using the “Stretch IRA” strategy, which allows you to take Required Minimum Distributions (RMDs) over your life expectancy. You are required to take annual RMDs. Remember to withdraw the required amount by December 31, 2024 each year.

Retirement Plan Setup for Small Businesses

If you’re considering setting up a retirement plan for your small business, the ideal time is now. Setup times generally range from 2 to 4 weeks, so waiting until late in the year is not advisable if you want the plan in place for tax year 2024. 

California’s new requirement for employers to offer retirement plans, known as the CalSavers program, is now fully phased in for employers with 5 or more employees and will be fully phased in for employers with 4 or less employees by 12/31/25. This means that all employers with at least 1 employee are required to provide a retirement savings plan of their own or enroll in CalSavers.

We’re here to answer any questions you might have. Please reach out if you need assistance. Our goal is to help you make informed decisions to meet your financial objectives over time.