deadlineIf, as the motivational mantra has it, goals are dreams with deadlines, then what have retirement goals to do with deadlines? As they pertain to taxes, quite a lot, actually. So as the end of year approaches, we came across some helpful reminders about key retirement deadlines in an excellent article by Lisa Hay for

“Taking withdrawals from retirement accounts without understanding the implications is risky business.

“Every year at tax time I see taxpayers who have made retirement account withdrawal mistakes, triggering unexpected taxes and penalties. The rules are very, very tricky.

“Many people assume the same rules apply to both 401(k)s and individual retirement accounts, or IRAs. Wrong.

“Here are important dates and ages you need to know to avoid some of the most common mistakes.

“Know these important deadlines

“The rules for when you have to take money out of employer-sponsored retirement accounts like 401(k)s are different from the rules for IRA withdrawals. You have to start taking required minimum distributions from IRAs by April 1 of the year after you turn 70 1/2 (and every year after that by Dec. 31). But if you’re still working at that age, you don’t have to take money out of your 401(k) until April 1 of the year after you retire.

“The penalty for failure to take required minimum distributions is a stiff 50% of the amount you were supposed to have withdrawn.

“Another difference: You can contribute to an IRA for the prior year up until you file your taxes (so you can contribute to a 2014 IRA until April 15, 2015). But the deadline for contributions to a 401(k) is your last paycheck of the year or Dec. 31st.

“Know these early distribution ages

“There’s an exception to the early distribution penalty that applies if you separate from service in the year you turn 55 or later and take a distribution from your retirement account after that separation. (Separating from service includes retirement or taking another job.)

“But people commonly misinterpret this rule. The age 55 penalty exception applies to when you separate from service — not when you take a distribution. Here’s an example: If you leave your employer at age 54, waiting until you turn 55 to take a withdrawal from your 401(k) — you will still owe a penalty! Why? Because you left the employer before you turned 55, even though you waited until after age 55 to take your money out.

“Please consult with a tax adviser for guidance before you take money out of your retirement accounts. Understanding the intricacies of the tax rules — and integrating your withdrawal decisions into a comprehensive financial plan which addresses your personal financial situation could result in big tax savings.

“That’s much better than unpleasant surprises at tax time.”