2025 Year-End Retirement Account Deadlines
The end of the year always brings a flurry of retirement account deadlines and planning opportunities. This year is no different. And, new for 2025, the One Big Beautiful Bill Act (OBBBA) brings new considerations, especially for Roth conversion planning.
Correcting IRA Contributions
The year 2024 may seem long gone, but for IRA owners who are now discovering they have an excess 2024 IRA contribution, there is still time to correct the contribution and avoid a 6% penalty. This can be done by withdrawing or recharacterizing the 2024 contribution, plus attributable income (or loss), by October 15, 2025. This is also the deadline to remove or recharacterize 2024 IRA contributions that are not actually excess contributions but are, instead, simply unwanted.
Making SEP Contributions
While contributions to a traditional or Roth IRA must be made by the tax-filing deadline, a SEP IRA plan can be established and funded at any time up to the business’s tax-filing deadline, including extensions. The SEP contribution limit for 2024 is 25% of up to $345,000 of compensation, but no greater than $69,000. Some businesses may have extensions for filing 2024 return until October 15, 2025.
Required Minimum Distributions (RMDs)
Any IRA owner older than age 73 this year must take a 2025 RMD by December 31, 2025. Roth IRA owners, on the other hand, never have to take RMDs. Employees in 401(k) and other employer plans are not required to take a 2025 RMD if they qualify for the “still-working exception.” Those who do not qualify must take their 2025 RMD from pre-tax accounts (but not Roth 401(k) accounts) by December 31.
Eligible designated beneficiaries and those beneficiaries who inherited before the arrival of the SECURE Act in 2020 can still use the stretch. These beneficiaries must take their 2025 RMDs by the end of the year.
Non-eligible designated beneficiaries who are subject to annual RMDs within the 10-year period must take their 2025 RMDs by the end of the year. 2025 is the first year that these annual RMDs, required by IRS regulations, will actually need to be taken. Annual RMDs during the 10-year period for years 2021, 2022, 2023, and 2024 were waived by the IRS.
Roth IRA Conversions
To qualify as a 2025 Roth conversion, funds must leave the IRA or company plan by December 31, 2025. (There is no such thing as a prior-year conversion.) It is certainly a good idea to wait until later in the year before converting in order to get a better picture of this year’s tax situation. But do not wait too long because some IRA custodians will not process conversions for the year after a specific date.
Qualified Charitable Distributions (QCDs)
QCDs remain a great tax break for charitably-inclined individuals. With a QCD, IRA owners (or beneficiaries) age 70½ or older can make a 2025 charitable contribution up to $108,000 through a tax-free transfer directly from their IRA. There is no such thing as a prior-year QCD, so those looking to take advantage of this tax break for 2025 need to get it done by December 31, 2025.
Net Unrealized Appreciation (NUA)
For 401(k) or ESOP participants with highly appreciated company stock, the NUA strategy can potentially produce significant tax savings. One requirement for the NUA strategy is that the participant’s entire account must be emptied within one calendar year. So, individuals planning to use the strategy for 2025 must start the process early enough to ensure the lump sum distribution occurs by December 31, 2025.
By Sarah Brenner, JD
Director of Retirement Education
Ed Slott and Company, LLC
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Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.
