Planning is crucial to financial success.  Do your homework, know key dates, and don’t procrastinate.

Key Dates from Mid – Year to Year – End

July:  Do a midyear review of your tax situation to avoid penalties for any underpayment of 2021 estimated taxes. To avoid the penalties, you can pay at least 90% of the current-year tax bill or 100% of the prior-year tax bill (110% if you have a high income). Look for other ways to slim down the tax due.

Sept. 15:  The third estimated tax payment for 2021 is due.  Many aren’t aware that you can withhold the tax from your RMD at any point in 2021 and it is treated as if you had paid federal taxes throughout the year.

Sept. 30:  This is the date Medicare sends out their annual notice of changes regarding benefits and premiums for either a Medicare Advantage or Part D prescription drug plan. The actual changes will take effect in 2022.

Top of Form

Oct. 15:  This is the date 2020 tax returns must be sent in for those who filed an extension. This is also the day that Medicare open enrollment starts. The clock starts now through Dec. 7 to change between traditional Medicare and Medicare Advantage.

You can also choose new Advantage and Part D plans, with coverage starting in 2022.  The increase or decrease in COLA also is released mid- October.  Estimates for the 2022 COLA range from 4.5 percent from Moody’s Analytics to 6.1 percent from The Senior Citizens League. A 5 percent increase would boost the average monthly benefit by about $77. The Social Security Administration will compare the CPI-W for July, August and September 2021 with the CPI-W for the same period in 2020. The percentage change from last year’s third quarter to this year’s third quarter will be the COLA amount for the following year.

October is also Estate Planning Awareness Month.  Review your wills, POAs, medical directives, beneficiaries. You want to ensure these documents are up to date with changing legislation and aligned with your current wishes

Nov. 1:   This day marks the start of retirees being able to buy health insurance for 2022 on the Affordable Care Act’s marketplace.  The window closes on December 15th.

Remember to review your portfolio for tax loss harvesting opportunities.

Dec. 1:  This is a good time to make any qualified charitable distributions from your IRA to ensure the charity receives it in time.  IRA owners 70½ or older can transfer up to $100,000 directly to a charity in 2021 with a QCD.  This applies to the sum of QCDs made to one or more charities in a calendar year.  (If you file your taxes jointly, your spouse can also make a QCD for his/her own IRA within the same tax year for up to $100,000).  For a QCD to count towards your current year’s RMD, the funds must come out of your IRA by the RMD deadline, which is usually December 31st.  A QCD excludes the amount donated from taxable income.  Keeping your taxable income lower may reduce the effect to certain tax credits and deductions such as Social Security and Medicare.

Dec. 7:  Open enrollment for Medicare ends.

Dec. 15:  As mentioned above, the Affordable Care Act’s exchanges open enrollment ends. Ensure you have taken your 2021 RMD.

Dec. 31:  As mentioned above, your RMD must have been made and any QCDs should have reached the designated charity by now.

What to be on the lookout for in 2022

  • Medicare Part A changes. An increase in Part A premiums, deductibles, and coinsurance. (Typically released no later than Fall)
  • Part B Medicare costs will likely decrease due to pandemic – related economic issues. (Typically released no later than Fall).
  • Part D premiums will increase slightly for 2022.
  • Plan C and Plan F are no longer available for new Medicare enrollees. They are only available to those who became eligible for Medicare prior to 2022.
  • There will be significant changes to Medicare Advantage plans in 2022.
  • “SECURE Act 2.0,” is working its’ way through the legislative process, as it has strong bipartisan support at the House and Senate levels. The provisions are expected to pass this year as a stand-alone bill or included in a broader budget, spending or tax reform package.  Key provisions are mandatory automatic enrollment in 401(k), 403(b) and Simple plans, additional delay for RMDs (increases the required distribution age to 73 in 2022, 74 in 2029 and 75 in 2032), increased catch – up contributions and a change to Roth tax treatment, more favorable provisions for part-time employees, matching contributions tied to student loan repayments, and more.

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Sources: AARP/ Kiplinger/ Fidelity/ Forbes

© Geier Asset Management, Inc. July 2021. Dan Mules, CPA is a Client Manager and Tax Planning Professional for Geier Asset Management, Inc., a Registered Investment Advisor. The articles & opinions expressed in this material were gathered from a variety of sources, but are reviewed by Geier Asset Management, Inc. prior to its dissemination. All sources are believed to be reliable but do not constitute specific investment advice. The views expressed are those of the firm as of July 2021 and are subject to change. These opinions are not intended to be a forecast of future events, a guarantee of results, or investment advice. Any advice given is general in nature and investors must consider their own individual circumstances. In all cases, please contact your investment professional before making any investment choices. Geier Asset Management, Inc. is not responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.