Age 70 1/2. Distributions from traditional IRAs and 401(k)s become required after age 70 1/2, and you must pay income tax on each withdrawal. If you fail to withdraw the correct amount, the tax penalty is a steep 50 percent of the amount that should have been withdrawn. "You do not want to miss that or there's a 50 percent excise tax," says Kimberly Foss, a certified financial planner and founder of Empyrion Wealth Management in Roseville, Calif. "You have to take it and pay the taxes, and then you can reinvest it wherever you want to." Individuals who continue to be employed after age 70 1/2 can delay distributions from their current 401(k), but not IRA, until April 1 of the year after they retire (unless they own 5 percent or more of the company sponsoring the plan). People age 70 1/2 and older are also no longer eligible to get a tax deduction for traditional IRA contributions.
December 31. You generally need to make 401(k) contributions by December 31 each year. Most required minimum distributions from retirement accounts (except for the first one) must be taken by December 31 annually to avoid the 50 percent tax penalty.
April 1. You have until April 1 to take your first required minimum distribution from a 401(k) or IRA. But delaying your first distribution could result in a significantly higher tax bill. "If you wait until April 1, you will be taking two distributions in one year," says John Sestina, a certified financial planner and president of John E. Sestina and Company in Columbus, Ohio. "Then you get this big chunk of taxable income in one year and you will be paying higher income taxes."
April 15. The deadline for filing your taxes is also the last day you can make an IRA contribution that will apply to the previous year's tax return. For example, retirement savers had until April 15, 2013, to get a tax deduction on their 2012 tax return by depositing money in an IRA. Someone in the 25 percent tax bracket who put $5,000 in a traditional IRA in April could save $1,250 on his current tax bill. "It's a 25 percent savings in taxes right off the bat, plus you are saving for your retirement," Foss says. "You're helping yourself in the short term, and it's for your own benefit down the road."