January 2021 Important Administrivia
Happy New Year once again! We have three important administrative items for you today:
Roth IRA Contributions (and yes, you can still do for 2020)
The eligibility “phase-out” AGI (adjusted gross income) has been increased for 2021
For taxpayers filing jointly, the phase-out AGI range has been increased: $198K to $208K (from $196K to $206K in 2020)
For single/head of household taxpayers, the AGI phase-out range has been increased: $125K to $140K (from $124K to $139K in 2020)
The maximum contribution remains at $6000 ($7000 for taxpayers over 50)
Remember that you can make 2020 Roth IRA contributions until April 15, 2021. Let us know if you want to do this, so we can advise how to provide instructions to Ameritrade to ensure the contribution is applied to the correct year.
2020 1099’s from Ameritrade (we know you can hardly wait)
As usual, 1099’s will be available in waves
The documents should be posted online on January 14, February 4 and February 11. Accounts with real estate funds will likely be in the last wave.
The mailed copies should be received 5 to 7 days after the online posting
There will be the usual rounds of corrected 1099’s for weeks and months
You will not get a 1099 from IRA’s of any type unless you took a distribution or withdrawal
Required Minimum Distributions (RMDs) are at record breaking levels
Your 2021 RMD is based on your IRA account value at the market close on 12.31.2020. As you probably remember from two weeks ago, despite what was the 2020 market rollercoaster, the end was pretty darn good.
You got a year older in the last year – and your RMD as percentage of your account value goes up every year
Many of you did not take a RMD in 2020 since the CARES Act removed the RMD requirement so your account balance got even higher – hopefully.
You can take your RMD’s in cash, shares or charitable contributions. Some states (like NC) require state income taxes to be withheld, regardless of which distribution option you select.
It is not yet clear whether RMD’s will actually be required for 2021 (although we have heard that the government needs tax revenue, so it’s likely that they will be required in 2021). If you do not need the cash right now, we advise waiting until path forward is confirmed. We will work with you individually on the process here.
As always, we are happy to help with any of the above!