Ready, set, retire – 8 deadlines you need to know

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Ready for Retirement? Keep these deadlines in mind.
This guide to important dates for Medicare, Social Security and retirement may help minimize taxes and maximize income — for you or your parents.

Key points

  • Help avoid unnecessary additional taxes by knowing the dates for optional and required retirement plan withdrawals
  • Your Social Security income may decrease or increase depending on the age at which you choose to begin receiving benefits
  • Minimize Medicare premiums and ensure coverage by familiarizing yourself with the program's rules and deadlines
At about age 50, the rules and deadlines for Medicare, Social Security, IRAs, 401(k)s and other employer-sponsored retirement plans start to kick in. Understanding those dates and processes is crucial, both for people who are approaching that age themselves as well as for those whose parents may need some help navigating and staying on top of these deadlines.
The decisions you or your parents make during pre- and post-retirement years can be important in determining how much money will be available during retirement. Debra Greenberg, Director of Retirement and Personal Wealth Solutions at Bank of America, offers this year-by-year guide.
The decisions you or your parents make can be important in determining how much money will be available in retirement.

Age 50

You're now eligible to make "catch-up" tax-advantaged contributions to 401(k)s and other employer-sponsored retirement plans as well as to IRAs.Footnote 1 View the most current 401(k) and IRA contribution limits.

Age 55

If you separate from service with your employer during or after the year you reach 55, you may be eligible to take a distribution from your account in the 401(k) or other employer-sponsored retirement plan without paying an additional 10% tax for early withdrawal (on top of regular income taxes). Such distributions are allowed only if you've left the employment of the company sponsoring that plan. But it's generally better to keep your tax-advantaged retirement savings or investments intact, suggests Greenberg. Also, continuing to make contributions to retirement plans while you're working full time may help your retirement account balances continue to grow.

Age 59½

Once you reach age 59½, withdrawals from employer-sponsored retirement plans and IRAs are no longer subject to the 10% early withdrawal tax, though you still may owe regular income tax on the distributions.

Age 62

Age 62 is the minimum age at which you can choose to begin receiving Social Security retirement benefits. But for each year you postpone taking this benefit (until age 70), your monthly check will be larger. "By age 62, you'll probably want to have determined your strategy — whether to start collecting Social Security, to keep working or to work and receive benefits, depending on your personal situation," Greenberg says. You can also choose to defer Social Security even if you are not working. If you continue to work and take Social Security, there are income limits that could reduce your benefits until you reach full retirement age.
Moreover, if you retire now and you do not work for one of the dwindling number of companies that provides continuing health coverage for retirees, you may be able to extend your group health benefits for a limited time through COBRA (or a state's "mini-COBRA" law). However, you'll have to pay the full cost of COBRA premiums (unless your employer subsidizes all or part of the cost), and once the COBRA benefits end, you'll probably need to purchase a private health insurance policy to tide you over until you're eligible for Medicare.

Age 65

This is the age at which most Americans are eligible for Medicare, the federal government's retirement health insurance program that covers much of the cost of physician and hospital care and other health services. But Medicare comes in several segments — parts A, B, C and D — and the rules for signing up and receiving benefits through each one are complex. Getting started with Medicare on the Medicare.gov site provides basic information about the program, with links to details about premium costs, enrollment deadlines and other important things to know. Age 65 is also when you need to consider purchasing a private "Medigap" insurance policy to help with copayments and deductibles not covered by Medicare.

Age 66

If you were born between 1943 and 1954, age 66 is your "full retirement age" for Social Security. That's the age at which you may first become entitled to full or unreduced retirement benefits. (Different age requirements apply to those born before 1943.) For those born after 1954, the full retirement age will increase by two months a year until the current maximum of age 67, for those born in 1960 and later.
Age to receive full Social Security benefits
Full Retirement Age (FRA) is the date when you can receive 100% of your Social Security Benefit, and it depends on the year you were born.
Chart displaying full retirement ages based on year of birth. Years 1943-1954: age 66. Year 1955: age 66 and 2 months. Year 1956: age 66 and 4 months. Year 1957: age 66 and 6 months. Year 1958: age 66 and 8 months. Year 1959: age 66 and 10 months. Years 1960 and later: age 67.

Age 70

If you've waited until your 70th birthday to begin taking Social Security, you'll now get the biggest possible monthly benefit, which may be as much as 76% larger than if you had started receiving payments at age 62. Any further delay in beginning payments won't increase benefit amounts.
The advantages of delaying your Social Security benefit
The older you are when you file for Social Security benefits, until you reach age 70, the greater your annual payment for the rest of your life. The chart below shows how the annual benefit amount can change for a retiree who is eligible to receive $24,000 per year at the Full Retirement Age (FRA)* of 66.
Chart displaying an estimate of your annual social security benefit based on the age you file for it. Age 62 = $18,000. Age 63 = $19,200. Age 64 = $20,800. Age 65 = $22,400. Age 66 = $24,000. Age 67 = $25,920. Age 68 = $27,840. Age 69 = $29,760. Age 70 = $31,680.

Required beginning date (RBD) age 70½ or 72

The rules have changed regarding when you must begin taking required minimum distributions, known as RMDs, from traditional and Roth 401(k) accounts or traditional IRAs. As of January 2020, individuals must begin taking RMDs starting at age 72, if they have turned age 70½ on or after January 1, 2020. You may defer your first RMD until April 1st in the year after you turn age 70½ or 72, as applicable, but then you're required to take two distributions in that year. RMD amounts are calculated as a percentage of your account balances and are based on your life expectancy. If you don't take the full amount of these annual distributions within the required time frame, you'll incur a significant additional tax of 50% of the difference between what you received and the required amount you should have withdrawn. Your first distribution is actually due by April 1st of the year after you reach 72. However, if you wait until that year to take the first withdrawal, you'll have to take a second one by December 31st of the same year. The additional income from that second distribution could put you in a higher tax bracket and has the potential to substantially increase your tax bill. Subsequent annual distributions are required by the end of each calendar year.
There's an exception to the RMD rules: If you continue to work, and you own less than 5% of the business sponsoring the plan, the plan may allow you to delay taking distributions from the 401(k) or other employer-sponsored retirement plan until the year you retire. However, you'll still need to start RMDs from all traditional IRAs according to the normal schedule. (There are no RMDs for Roth IRAs.)
Merrill offers two services to help simplify this process for you:
  1. You can complete distributions online from a Merrill IRA to a linked Bank of America checking, savings or Merrill non-retirement account.
  2. The Merrill RMD Service allows you to authorize Merrill to automatically calculate and distribute your annual RMD from your Merrill IRA to your non-retirement account.
Be sure to speak with your tax advisor about requirements that may be specific to your situation.
Depending on your age, these deadlines could affect you, your older parents or your adult children nearing retirement age. Sharing this article with family members could help them prepare and make the most of opportunities to potentially increase retirement income.
Next steps

Footnote 1 Consult your tax advisor as there are phase-out ranges for IRA contribution deductibility based on your age; tax filing status (married, filing jointly; married, filing separately, single, spousal IRA, filing jointly); and whether or not you participate in an employer-sponsored retirement plan.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
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