As the year comes to a close, it’s an important time to revisit your financials to maximize savings, ensure you start the new year strong and stay on track to accomplish your goals. From managing your investments to executing your charitable gifting strategy, here are some checklist financial planning items you might want to consider as you get ready for next year.


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Tax Manage Your Investments

Your investments will be even more profitable if you review them with an eye for tax savings.

Tax-loss harvesting: Look to sell losing investment positions to offset capital gains. Be aware of and abide by wash sale rules.

Rebalancing your portfolio and delaying tax payments: With the markets up substantially over the last several years, you’ll probably want to bring your asset allocation to their target weights, but you might want to delay taking those large gains until January so you can delay paying the taxes another 12 months.

Optimize income and expenses: If possible, delay the receipt of year-end bonuses until 2019 and accelerate expenses into 2018 to potentially lower your 2018 tax bill.

Mutual fund distributions: Mutual funds distribute capital gains distributions toward the end of the year. If you’re buying into a fund late in the year, check to see if they’ve already made the distribution. You don’t want to essentially buy someone else’s large capital gains distributions.

Max out contributions: If possible, ensure you max out contributions to 401(k) plans, IRAs (not due until April 15), SEP IRAs (due April 15 or at extension deadline), SIMPLE IRAs (April 15) or other qualified accounts.

Consider a Roth conversion: With a Roth conversion (December 31 deadline), you’ll convert pre-tax IRA money into nontaxable Roth IRA money. You’ll be taxed on the conversion amount as ordinary income, but all future gains and distributions within the limitations won’t be taxed. This makes the most sense to do if you’ve had a down year income-wise. Also, unlike in previous years, you can’t change your mind and reverse the Roth conversion through a Roth re-characterization due to the Tax Cuts and Jobs Act (TCJA).

Review the Basics and Tidy Up your Accounts

The end of the year is the perfect time to review your insurance and retirement accounts.

Review health savings accounts (HSA) contributions: You have until the April tax deadline to make an HSA contribution. If you don’t currently have an HSA, you may want to determine if you’re eligible, given the account’s triple tax benefits.

Spend Flexible Savings Account (FSA) remaining balances: If you don’t use the money in your FSA account by December 31, you lose out on the opportunity to spend it.

Update beneficiaries on retirement accounts and insurance policies: Failing to update beneficiaries is one of the biggest financial and estate planning blunders one can make. If there’s been a change in your circumstances, it’s important to address this.

Execute your Charitable Gifting Strategy

Charitable giving doesn't just make you feel good about helping others, it can also reduce your tax burden.

Reduce estate size: Make annual gifts to reduce the size of your estate. The annual gift tax exclusion is $15,000 for 2018.

Donor-advised fund: With the TCJA’s higher standard deduction, fewer people will be able to itemize. You may want to consider committing the next several years of your expected charitable contributions to a donor-advised fund (DAF) in 2018. The DAF will let you make the actual contributions to the charity over time, but you can take the deduction immediately.

Fund charitable gifts wisely: If you’re making a charitable contribution, it’s preferable tax-wise to donate low basis stock to a charity or DAF as opposed to selling positions and giving cash.

Qualified charitable distribution: Another way to minimize your tax burden for those who may not be able to itemize any more and are over age 70.5 is to take a qualified charitable distribution (QCD), which is a direct distribution under $100,000 from an IRA to a charity. The QCD counts toward the required minimum distribution and reduces the tax burden associated with it.

Be Mindful of Age Milestones

There are benefits to getting older, including some that affect your taxes and income.

  • Over 50: You are now eligible to make catch-up contributions to your IRAs and some qualified plans.
  • Over 55: You are now eligible to take certain types of distributions from your old 401(k) plans without penalty.
  • Over 59.5: You are now eligible to take an IRA distribution without a 10% penalty.
  • Over 62: You are now eligible for Social Security.
  • Over 65: You are now eligible for Medicare.
  • Over 70.5: Don’t forget to take your required minimum distributions (RMDs)on your IRA accounts. There’s a massive 50% penalty if you fail to take the RMD.

Open Accounts for Your Children or Grandchildren

Open Roth IRA or traditional IRA accounts for children or grandchildren who have earned income. Child IRA assets are non-assessable in the FAFSA for student aid eligibility. You don’t necessarily have to put the money they’ve earned into the Roth IRA or IRA, you can let them spend the money they’ve made and then redirect other money that’s going toward college savings into a Roth IRA.

Consider 529 contributions for your children, grandchildren or yourself. If you already have children, opening a 529 is simply a must to begin saving for those college years. People without children can also open 529s for themselves and change the beneficiary once they have children. This maximizes the amount of tax-free compounding in the accounts.


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Matthew  A. Helfrich profile photo
Matthew A. Helfrich
Partner and President
Waldron Private Wealth
412 221 1005