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5 Year-End Planning Considerations

The end of the year is a great time to review the progress you’ve made toward your goals and take advantage of some planning opportunities. Below are five items to consider.

  1. Portfolio Adjustments
  • If you have a taxable investment account you will want to do tax-loss harvesting on any capital losses.
  • Some investments will distribute capital gains so pay attention to the date and amount of the distribution.
  • If you’re over 70.5 years old, make sure you take your required minimum distribution (RMD). You will also have a RMD, regardless of your age, if you are the owner of a beneficiary (inherited) IRA account.
  • Lastly, if you haven’t rebalanced your portfolio recently, this would be a good time to get back to your targets.
  1. Excess Cash
  • The annual gift tax exclusion is $14,000. This can be gifted to as many individuals as you’d like each year.
  • Consider charitable donations.
  • Consider IRA contributions, if eligible.
  1. Tax Bracket
  • If you are in a low-income tax year consider a Roth IRA conversion to convert some or all of your IRA to your Roth. This strategy works best when the conversion uses a lower tax bracket than you expect to be in throughout retirement.
  • Check out our post on year-end tax moves to reduce your income taxes owed.
  1. Budget
  • Take some time to review your budget and consider adjustments for next year.
  • If you have never used a budget, this is a great time to make one for next year.
  1. Health insurance
  • You may have received a letter from your insurer about changes to your policy which would require some action on your part. Even if you haven’t received such a letter, the end of the year is a good time to review your coverage and consider any adjustments that may be needed.

This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney and tax advisor for guidance on your specific situation.