I believe I’ve answered my own question. I went straight to the source, IRS instructions for Form 8889.
There are a lot of confusing, seemingly contradictory provisions, but it seems to come down to one statement.
“Note. If you are age 55 or older at the end of your tax year, you can make an additional contribution of $1,000.”
Glad you found that. I remember feeling fairly confident in my approach but cannot find the source I used to gain that confidence. This was on my '22 return so hopefully I will not be hearing from the IRS.
Yes, we confirmed it with our financial advisor and our Medicare broker/agent because we had to prorate for H in 2023. In our case, we only had an HSA for H; we always put our full contribution in that. I opened an HSA at my credit union so that I could contribute up to our allowable annual contribution (I am still on a high deductible health plan) for 2023. I will be able to contribute a prorated amount this year, since I turn 65 late in the year. I can use it to pay for H’s dental and vision costs, but it can’t be used to pay for his Medicare … but if there is still money in the account after I am 65, we can use it to pay for his Medicare costs incurred after I am on Medicare.
And if anyone on this thread thinks that they know what they need for retirement…let me add this!
Went to a Social Security planning presentation this week and am going to the follow-up to discuss specific benefit strategies. Have been updating my annual spreadsheet of all our accounts and starting some distribution strategy planning. Was showing H this stuff and discussing tax issues.
Friends, he has a BS and JD from the business school and law school of the a university that’s a member of a green-leafed athletic conference regularly discussed on these boards. He does financial regulation, bankruptcy and admin law. He crunches numbers for breakfast.
He did not realize his 401k distributions will be taxable.
As a former pension/401k administrator, I’ve heard this assumption many times from plan participants. Never thought I’d hear it from him! I have clearly failed in my duty! However, I distinctly remember having some of these conversations over the years, so it may be that he just filed that into the “don’t need to know this now” and “I’m not ready to think about that” directories in his brain.
None of us are too smart to simply wing these decisions!
The cobblers children have no shoes.
Just this week I had a friend admit that she had thought 401K withdrawals were not taxable after age 65. After discussion, I realized this misunderstanding can happen because there are also rules about early withdrawal taxation / penalty.
LOL - There was a time many years ago where I had assumed that Medicare started at age 62 if you started taking SS early. Oops.
Medicare does start at age 65 regardless of when you start taking SS.
All of this is why I thank doG for our amazing broker/FP and our tax attorney. There have been no surprises. I know many of you manage your own money but, after a certain threshold, DH and I knew there would be too may pitfalls for us to navigate with our limited knowledge (and DH is an economist and Big Five finance consultant), so we opted to pay the small percentage to have the professionals in there with us. We don’t begrudge them a single penny.
Right you are. Thanks! I just fixed my typo.
Along the same lines…my son has been dutifully maxing out his Roth 401K at work and Roth IRA at Fidelity…all the while thinking that money could not be touched for 50 years. I told him countless times that he can withdraw the contributions w/o tax or penalty which is why I insist he retain the 5498 forms, but clearly he was not listening. He finally heard me mention it yet again when he was home at Christmas and admitted that he didn’t realize he could tap the Roth. Probably best he not tap it, but still…
@Colorado_mom – I agree that the rules can all become confusing. I remember someone correcting me when I said that you couldn’t touch 401K money until 70.5 (now 72-75) because I only knew about RMD ages and never knew that you could tap it at 59.5.
@oldfort They don’t have shoes! 
We don’t have wills, either. H is just not willing to deal with family law and estate issues. Childhood family trauma never ends. I’ve been trying to get this moving since 1990.
Oh, that is frustrating. Hopefully you have some joint accounts and beneficiary/alternate designations on all assets.
@CT1417 Once you age hit 59.5, you can hit the 401k without the 10% early distribution penalty. The distribution is still taxable income, though.
The RMD rule used to be that you had to take the first one by April 1 after turning 70.5. (So if you turned 70.5 in June 2018, you had to take it by 4/1/19. However, if you took that first RMD after 1/1/19, you’d have to take TWO RMDs in 2019. The first one was for 2018 and the second was for 2019.) Used these dates to avoid confusion over the suspension of some of these rules during Covid.
The 4/1 deadline has survived the changes to SECURE 2.0 Act, so that rule still applies – it’s just the age that RMDs begin is now later. (source: https://www.irs.gov/newsroom/irs-reminds-those-aged-73-and-older-to-make-required-withdrawals-from-iras-and-retirement-plans-by-dec-31-notes-changes-in-the-law-for-2023)
We had only joint accounts (except for retirement accounts) until about three years ago. We each have a small personal account now.
When we got I-Bonds, we set them up individually because of the per-person limit on the amount that can be contributed. We need to fix those. I know everything at Vanguard is JTWROS. The house is JTWROS. Life insurance policies also have beneficiary designations. Need to check our USAA and BOA bank accounts. They are joint, but we’ve had them so long I don’t know if there are beneficiaries on them or not.
This is part of the process I’m starting as we start to inch towards H’s retirement. We don’t have anything financially or legally complicated, but in Maryland, spouses don’t get the full inheritance if the decedent dies without a will. The non-profit group that did the Soc Sec session I attended last week also has a free legacy planning course. I intend to take that one, too.
Thanks! I know the RMD rules now, but for a while, I suffered under the misconception that no one could touch IRA money w/o penalty until 70.5. I hadn’t realized it was available at 59.5, until someone corrected me.
Similar thinking to my son who thought that he couldn’t touch his Roth money until retirement.
Now I just hope that Roth accounts don’t end up taxable (means testing or something) in the next 50 years.
If there’s means testing (not that I don’t see the injustice of changing the rules for previously saved funds), I guess it means that he’ll be able to afford paying the taxes.
Probably at a much higher rate as tax brackets potentially will adjust upwards by then.
Sounds like your are making good progress. One thing that can be really helpful is just a list of all assets (with or without $ amount) that shows owner, joint owner (where applicable), beneficiaries, alternates. There will be some holes, where you need to assign. And sigh…. you’ll need to recheck them - my husband does this annually since some places seem to somehow loose the beneficiary designation.
Yea, the house can be a concern if there is not will. Details vary by state.
Throwing a grenade into this thread. 
I happened to listen to this interesting podcast yesterday.
“ * *The RAND Corporation did a study about retirement, and it found that fewer than 40 percent of American workers follow what’s called the “standard pattern” of retiring directly and completely from a full-time job. In other words, “I now work full-time. Now I retire. And now I don’t work at all.And they found that about 14 percent of respondents transition from full-time work to part-time work. About 17 percent leave the workforce and subsequently re-enter — in other words, “I thought retiring was a good idea.” …. And then, 26 percent remain in full- or part-time jobs past the age of 70. And this RAND study also found that seniors who had better cognitive ability were more likely to follow the nonstandard retirement pathways.
The discussion echoed many themes here, including “ And I would argue that the financial change of not earning money is maybe matched by the psychic problem. It’s really hard to adjust to the feeling of drawing down your money, rather than contributing or saving.