Plan for Tomorrow | Four steps to add to your retirement planning checklist before year-end
Am older couple laughs while riding a sled in the snow

Four steps to add to your retirement planning checklist before year-end

Sep 20, 2023, 7:48:08 PM | Reading Time: 5 minutes

Taking actions that can help maximize your retirement savings can be a welcome activity any time of year, but you may find working it into your year-end financial review to be a convenient time to take a closer look. Building a retirement plan can help set the stage for a more secure future by helping ensure you have adequate income for your needs while closing any savings gaps. With another year coming to a close, it can be beneficial to review your retirement accounts and determine if there are ways to give your savings a boost. Here are some helpful tips and deadlines to consider before the New Year arrives.

1. Review Required Minimum Distributions

A required minimum distribution (RMD) is the IRS-mandated amount of money that is required to be withdrawn from a traditional IRA or employer-sponsored retirement accounts, like a 401(k) or 403 (b), by December 31 each year. In general, you have to start taking withdrawals when you reach age 72, or 70 ½ if you turned 70 ½ before January 1, 2020.

To calculate your RMD, you divide the prior December 31 balance of your account by a life expectancy factor provided by the IRS. If you own multiple IRAs or 401(k)s, you will need to calculate the RMD for each account. It’s important not to miss the deadline, because you could get hit with a 50% tax penalty on the amount of missed RMD. As an account owner, you can withdraw more than the RMD, just remember that the withdrawal can be taxed as ordinary income. Some providers allow you to set up an automatic withdrawal so you can rest assured that your RMD can be taken on time or schedule monthly distributions if that aligns better with your goals.

As part of the SECURE Act 2.0, there may be changes on the horizon. An increase to the age for taking RMDS could be part of those changes

Your financial professional or tax advisor can work with you to optimize your RMDs and discuss timing and strategies for potentially minimizing taxes. Some of these tactics include taking more than the RMD or turning your RMD into a qualified charitable distribution (QCD) that contributes directly from a traditional IRA to a charity of your choice.

2. Consider maximizing your 401(k) contributions

Many employees put a portion of their pay automatically into their 401(k) throughout the year. Employers can also match employee contributions, helping to build those savings for the future. Each contribution you make can help lower your taxable income for the year, and because of this, the Internal Revenue Service (IRS) caps the amount you can contribute annually. This also ensures higher earners are not unfairly benefitting from certain tax advantages. Toward the end of each year, the IRS reviews the maximum contribution limits for 401(k) plans and may make adjustments to those amounts for the following year.

How much can I contribute to my retirement account?

Your retirement strategy is unique to you, aligning with your goals, income, and financial situation—and may fluctuate from year to year. If you’re further away from retirement and are currently tackling student loans or buying a new house, for example, you may not have the capacity to contribute as much as you’d like toward retirement that year. On the other hand, if you’re closer to retiring, or have a year where you have more financial flexibility, it may make sense to contribute as much as you can towards these accounts. Outside factors like inflation and market volatility may also play a part in deciding how much you can comfortably contribute each year.

What is the maximum retirement contribution for 2022?

Employees can contribute up to $20,500 to their traditional, safe harbor, or automatic 401(k) plan for 2022. Employees age 50 or over, are also eligible for an additional catch-up contribution of $6,500.1 This was put in place to encourage workers approaching retirement to increase their savings for the future. If you have multiple 401(k) plans, your total contributions to all of the accounts cannot exceed $20,500. If your employer makes elective contributions to your account, there are limits set here as well. Total employer and employee contributions for 2022 cannot exceed $61,000 or 100% employee compensation. 1

3. Contribute to your 401(k) before the deadline

If you haven’t met the maximum contribution amount for your 401(k) this year and would like to put more toward retirement, you still have time to do so. Since contributions can be made through payroll deductions, you can have until December 31 to contribute additional funds. Based on your income and filing status, your contributions to a qualified 401(k) may lower your tax bill, so making those contributions before year-end can be beneficial when tax time arrives.

Can I make 401(k) contributions after the year's end?

In most cases, contributions to your 401(k) are due before the end of the calendar year, but some employers’ plans have a longer period to make matching contributions for a given year. In this case, you may be able to contribute up to the tax filing deadline for the company. Check with the human resources department to see the specific rules for your organization’s plan.

4. Build a long-term plan for retirement

No matter where you are in life’s journey, you don’t have to wait until year-end deadlines to take important steps to prepare for a more financially secure retirement. It’s never too late to start planning, and the sooner you do, the more opportunity you have to create a comprehensive strategy that can help provide the income you need for a potentially lengthy retirement. It can be especially beneficial to put a long-term plan in place while you’re still earning regular income and can build more savings for the future.

What’s something you should do when planning for retirement?

To determine the best plan of action when creating a retirement strategy, first define your goals for the future, choosing an estimated retirement age, and calculate how much income you’ll need to help fund your retirement lifestyle. This can provide an important foundation on which to build the plan that is needed to help achieve these goals. Predicting how much you’ll need as a retiree can allow you to determine the savings required to live the life you envision, while most importantly, helping identify any income gaps that need to be filled.

How do I create a retirement plan?

Once you’ve set your financial goals, you can then create the roadmap to retirement. Meeting with a financial professional can help you tackle retirement planning more effectively by helping ensure you’ve checked all the boxes and have identified ways to maximize your saving opportunities. Together you can discuss potential retirement risks—including inflation, longevity, rising healthcare costs, and market volatility—and how best to prepare for these factors. You can also discuss Social Security, life insurance needs, estate planning, and other insurance coverage options.

A financial professional can also help answer key questions and make the overall process less complex; helping you to build a personalized financial strategy that sets you on the right track toward achieving your goals for retirement. Meeting with your financial professional yearly, or following any major life events, can help determine if any updates need to be made to your projected income needs, goals, or retirement timeline. Most importantly, having a financial professional in your corner can help you navigate the ins and outs of retirement planning with intention and more confidence.

The sooner you start creating your retirement plan, the sooner you can get yourself on the right track to successfully achieving your goals for the future. If you already have an established plan, the end of the year can offer a good opportunity to review your retirement accounts and identify ways to maximize contributions, boost your savings, and get one step closer to a more secure retirement.

Neither North American Company for Life and Health Insurance, nor its agents give legal, tax or investment advice. Please consult with and rely on a qualified advisor.

1.Source:, Operating a 401(k) Plan, 2022