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You've Only Got 75 Days Left to Make These 3 Retirement Moves

By Kailey Hagen – Updated Oct 18, 2021 at 11:45AM

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The end of the year is in sight. Have you made these crucial retirement moves yet?

It's hard to believe we only have 75 days until we'll be ringing in 2022. You might be wondering how 2021 got away from you so fast. I know I am. But there's still time to cross a few things off your annual to-do list. Here are a few retirement moves you might want to make your top priority.

1. Contribute to your 401(k)

While you can make prior-year IRA contributions up until the April tax deadline, you must make all your 2021 401(k) contributions by the end of the year. That's because your 401(k) contributions come directly out of your paychecks, rather than from savings you contribute on your own schedule.

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You're allowed to contribute up to $19,500 to a 401(k) in 2021 or $26,000 if you're 50 or older. If you're not there yet, do your best to contribute as much as you can over the remaining weeks. This is especially important if you qualify for a 401(k) match but haven't contributed enough to meet the full match amount.

Talk to your employer to figure out how your company's matching formula works and how much of your match you've already claimed. Then, if possible, increase your 401(k) contributions for the rest of the year or until you get the full match. If you miss out on this opportunity, that money is gone forever, so claiming your match should definitely be a priority if you can afford to do so.

Those who are nearing the annual contribution maximum should be careful as they approach the end of the year. Over-contributing could cause you to incur costly penalties. Check with your employer or plan administrator to find out how much you've already contributed to your 401(k) this year. Halt your contributions for the rest of 2021, if necessary, to prevent over-contributions.

2. Contribute to your HSA

Individuals may contribute up to $3,600 to a health savings account (HSA) in 2021, and families may contribute up to $7,200. Now, technically, HSA contributions aren't limited by the end of the year -- you have until the tax-filing deadline of the following year. However, getting in those contributions sooner rather than later can make it easier to front-load your HSA the next year, if that's a strategy you'd prefer.

HSAs are meant to house money for medical costs, but they make such great retirement accounts that many people stash their extra savings here for the tax advantages. 

Your HSA contributions reduce your taxable income for the year and if you use the money for medical expenses, you won't pay taxes on them at all. You can also make non-medical withdrawals, though you must pay taxes on these, plus a 20% early withdrawal penalty if you're under 65.

But in order to contribute to an HSA, you must have a qualifying health insurance plan. This is one with a deductible of $1,400 or more for an individual or $2,800 or more for a family in 2021. If you have one of these plans, you can open an HSA with a bank or broker. Look for an account provider that enables you to invest your funds so they can grow more quickly.

3. Take your 2021 RMDs

Those 72 or older must take their required minimum distributions (RMDs) before the end of the year to avoid government penalties. These are mandatory withdrawals you must take from all your retirement accounts except Roth IRAs. However, if you're still working and own less than 5% of the company you work for, you may also delay RMDs from that workplace's retirement account until the year you retire.

If you turned 72 in 2021, you technically have until April 1, 2022, to make your first RMD, but for everyone older than 72, the deadline is the end of the year.

How much you have to take out depends on how much money you have in your account. Divide your account balance at the end of the previous year by the distribution period listed next to your age in this table.

For example, if you're 75 with $250,000 in savings, you would divide this sum by the 22.9 distribution period for 75 year-olds to get an RMD of $10,917. This is the minimum you must withdraw from that account before the end of the year, though you're free to withdraw more if you choose. Then, repeat this process for every retirement account you must take RMDs from.

If you've already withdrawn more than your RMD from your retirement accounts during the year, then there isn't anything more you need to do. But if you haven't done this yet, it's important to do so now. Failure to take your RMDs results in a 50% penalty on the amount you should have withdrawn.

Looking forward to 2022

While you're already focused on your retirement savings, now is a great time to look ahead to 2022. Plan to make regular retirement contributions throughout the year if you can afford to do so, and check over your retirement plan again to make sure you're still on track. If not, make changes now so you can start 2022 off on the right foot.

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