Case of the Week: 2013 Year-End Reminders

The ERISA consultants at the Columbia Management Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with a financial advisor in Pennsylvania is representative of a common inquiry involving retirement plan-related year-end deadlines. The advisor asked:

“What year-end deadlines should I make my clients aware of?”

Highlights of Discussion

There are several Dec. 31, 2013, deadlines of which employers, retirement plan participants and IRA owners should be aware. The list below includes several, but it is by no means exhaustive.

2013 plan establishment: Businesses that operate on a calendar year basis that wish to establish a profit sharing, 401(k), employee stock ownership (ESOP) or defined benefit plan for 2013 must do so by Dec. 31, 2013. (Businesses may establish simplified employee pension (SEP) plans for 2013 through their tax filing deadline, plus extensions.)
2013 Roth conversion: In order for a taxpayer to consider either a Roth IRA or Roth 401(k) in-plan conversion for 2013 tax purposes, he or she must complete the conversion no later than Dec. 31, 2013. (Don’t confuse the 2013 conversion deadline with the deadline for making a 2013 Roth IRA contribution, which is April 15, 2014.)
2013 qualified charitable IRA distribution: Set to expire at the end of this year is the ability for a taxpayer to make a qualified charitable IRA distribution. IRA owners and beneficiaries age 70-1/2 or more can transfer up to $100,000 from their IRAs to an eligible charity, and exclude the amount from gross income. The excluded amount can be used to satisfy any required minimum distributions that are due from their IRAs for 2013.
2013 required minimum distribution for second or subsequent distribution years: Plan participants and IRA owners who have begun their required minimum distributions must take their second or subsequent years’ RMDs by Dec. 31, 2013 — or face a 50% penalty on the amount not taken.
Voluntary compliance for Section 403(b) plans: A 50% compliance fee reduction is available only through Dec. 31, 2013, for certain corrections for 403(b) plan sponsors that failed to timely adopt a written plan document in the past.
Discretionary plan amendments: Plan sponsors with calendar-year plans that made discretionary operational changes to their retirement plans during the year must generally amend their plan documents to reflect such changes no later than Dec. 31, 2013.


Well before the New Year’s Eve celebration begins, individuals should check with their tax advisors to see if Dec. 31, 2013, marks the deadline for important 2013 transactions like those listed above.
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The Columbia Management Retirement Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC, a third-party industry consultant that is not affiliated with Columbia Management. For informational purposes only. Please consult a tax advisor or attorney for specific tax or legal needs. © 2013 Columbia Management Investment Advisers, LLC. Used with permission.

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