The 2024 year is quickly ending. This means time is running out on various year-end deadlines. You will want to be sure to get the following tasks done sooner rather than later to avoid penalties and missed opportunities:
Submit your beneficial ownership information to FinCEN
If you own a business or limited liability company (or other similar entity that was formed or registered to do business in the United States) you must report information about your owners and controllers to FinCEN by January 1, 2025. Go to the FinCEN website and follow the instructions. Failure to do so will result in $500 daily fines and up to 2 years in prison.
Note: this applies even to LLCs that are not operating businesses like those which may only exist for estate or liability planning.
Take your RMD
If you have a traditional IRA and turned age 74 or older this year, you will need to take a 2024 required minimum distribution by the end of the year. If you turned 73 in 2024, you have a little extra time to take your first RMD. Your deadline is April 1, 2025. Note: delaying your 2024 RMD into 2025 means you will have two RMDs due for 2025.
Many beneficiaries are required to take 2024 RMDs from inherited IRAs. If you inherited an IRA prior to 2020 or if you are an eligible designated beneficiary who inherited an IRA between 2020 and 2023, you will need to take an RMD for this year. Beneficiaries subject to the new 10-year payout rule under the SECURE Act don’t need to do anything in 2024. Due to all the confusion surrounding the 10-year rule, the IRS has said that a beneficiary subject to this rule is not required to take a 2024 RMD. This changes in 2025.
Don’t donate cash, consider a QCD instead
Still need to fulfill your zakah obligations? Consider giving through your IRA. If you are age 70 ½ or older a qualified charitable distribution (QCD) is a tax-free transfer directly from your IRA to your favorite charity. The limit for 2024 is $105,000. A QCD can satisfy an RMD and is not included in your modified adjusted gross income. Note that there is no such thing as a “prior year QCD,” so if you’re interested in doing a QCD for this year, it must be done by December 31, 2024.
Convert to a Roth IRA if you’re in a lower income bracket
Tax rates are historically low, and these rates are not likely to last much longer. This may be an ideal time for Roth IRA conversions. Of course, it depends on your specific situation, so we highly recommend you consult with your financial advisor. The deadline for converting for this year is December 31, 2024.
Consider gifting individuals
In 2024, you can give up to $18,000 a year to as many people as you choose ($36,000 if you and your spouse both make the gift) without any gift tax consequences. You can also pay for tuition or medical expenses on behalf of another person if the payment is made directly to the billing institution. This can potentially reduce your taxable estate, leading to lower federal or state estate taxes in the future.
Make your charitable lead trust distribution
Be sure to make your distribution from your charitable lead trust to your designated charity before the end of the year. Check with your charitable administrator for more information.
Maximize your 2024 retirement plan contributions
There’s still time to max out contributions to your retirement plans. The 2024 limit on salary deferrals in a 401(K) is $23,000. If you are 50 or older, you can make an additional contribution of $7,500. For SIMPLE IRAs, the salary deferral limit is $16,000. If you are 50 or older, you can make an additional contribution of $3,500. Use this reference guide to keep track of some of this year’s important annual limits.
