If you have an outside IRA, be sure to fund it by the deadline. Image: Andrey_Popov/Shutterstock.com
By: John GrobeThe Employee Benefits Research Institute estimates that participants in Flexible Spending Accounts forfeited roughly $4.5 billion in 2023 and $5.1 billion in 2022. That’s a lot of money gone to waste. FSAs are designed to let employees (they’re not available for retirees) set aside money on a pre-tax basis for unreimbursed healthcare and dependent care expenses, but the money has to be spent by the end of the year (though health care FSAs allow a small amount to be carried over into the next year).
Well, FSAs are not the only things we have to pay attention to when the end of the year arrives, there are several other that we need to monitor so that we’re not left out in the cold at the end of the calendar year.
What about TSP contributions?
Are you on target to contribute the maximum amount by the last pay date of the year? If you didn’t up your contribution amount for 2025 at the beginning of the year, you’re not. Assuming that you can afford to do so, adjust your contributions so that you max out in your final paycheck of 2025.
What about federal (and state, if applicable) income tax withholding?
Did you owe on your 2024 tax? Were you subject to the estimated tax penalty? Then increase your withholding so that you’re covered for your 2025 taxes. Conversely, if you got a large refund, you might want to adjust your withholding down and start seeing a larger paycheck for the rest of the year. If you receive income from which taxes have not been withheld (e.g., rent, royalties, etc.), don’t overlook making estimated tax payments on a quarterly basis.
If you have an outside IRA, be sure to fund it by the deadline.
For IRAs, the deadline is April 15 of the following year. For 2024, you could have contributed up to April 15, 2025. Be aware that IRA custodians get slammed with last minute contributions and can fall behind in processing. Get your contributions in well before the deadline.
If you’re one of our readers who is over the age of 73 (changing to 75 in 2033), don’t forget that you must take required minimum distributions from traditional IRAs and your traditional TSP (if you’re still working at your federal job, you will not have to take RMDs from your TSP).
The deadline for your first RMD is April 1st of the following year. All subsequent RMDs must be taken by December 31st. As with year end IRA contributions, IRA custodians get slammed with last minute RMD requests; get yours in with time to spare.
Ideally, we should be monitoring the above items throughout the year. However, if we don’t, we should check on them with a few months left to go and take any necessary actions then.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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