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  • Michael Schreiber

Get a jump on year-end planning.

Updated: Jan 17, 2020

Year-end Financial Planning Checklist

It’s hard to believe that we have entered the 4th quarter of 2018! The holidays are right around the corner and October is a great time to take control of your financial situation and any year-end tasks that need to be completed by December 31st. To help you get a jump on things so you can spend more time enjoying the holiday season with family and friends, the following are some items to consider:

  • Capital Gains/Losses – If you have a loss carryforward or any significant losses or gains from investments outside of our management, please let us know so that we can factor that into our year-end investment planning. We are always looking to take advantage of harvesting losses if available, with the goal to offset any realized capital gains to decrease your overall tax liability.

  • Workplace Retirement Plans - If you are still working, make sure to maximize contributions to your retirement plan. In 2018, the limits increased and you can contribute up to $18,500, or $24,500 if you're age 50 or older, and you have until December 31 to reach that limit. Reach out to your employer's payroll department, or if we manage a Solo 401(k) for your self-employment income, contact our office on how to make contributions by year-end.

  • IRA Savings - If you earn taxable income and are under the age of 70 ½, you can contribute up to a maximum of $5,500 ($6,500 if you are age 50 or older), although it may or may not be tax deductible. A nonworking spouse can also contribute to an IRA as long as their spouse has taxable income. The IRS gives you until April 15, 2019 to make your contribution for 2018, but it is always a good idea to review how much you still may wish to contribute.

  • Charitable Contributions – In light of the new tax law, we have received questions throughout the year about the charitable deduction, which is still available if you itemize your taxes. It is best to reach out to your tax advisor to see how your charitable giving plan may be impacted, but if you have not yet supported your favorite charities and are planning on doing so, please remember that you can use gifts of appreciated stock instead of cash. In addition to benefiting the charitable organization, you eliminate capital gains tax liability and reduce your overall income. You may want to consider a donor-advised fund, a type of charitable giving program that allows you to make tax-deductible contributions, invest in a pooled fund, and then support charities at any time.

  • College Savings - If you contribute to a 529 plan (or wish to open one prior to year-end), you should review how much you have gifted to your children or grandchildren this year. The annual gift exclusion increased to $15,000 in 2018, so you may gift up to that amount to each person per year. If you are married, you and your spouse can give $30,000 to each recipient per year.

  • Maximize Gift Allowances – Gifting does not have to be limited to charities and college savings. If you have a loved one that you plan on making a check to, do it before the December deadline. The same gift limits apply—$15,000 for singles and $30,000 for couples.

  • Required Minimum Distributions from IRAs - If you are over 70 ½ and have not yet taken your distribution, our office will be in contact to ensure that your RMD is satisfied for the year. As a reminder, RMDs from all of your retirement assets should be taken or you will face a 50% excise tax on any undistributed amounts. If you want to donate to charity this year, you may want to consider a qualified charitable distribution (QCD), which is a direct transfer of funds from your IRA to a qualified charity, which counts toward your RMD for the year up to $100,000. This can be a significant tax advantage, so we are happy to work with your tax advisor if you are interested.

  • Employee Open Enrollment – Fall is open enrollment season for most employees when you can enroll in or change any of your company’s benefits. If you are enrolling in a high-deductible health plan with a health savings account (HSA), we recommend contributing the maximum amount if your budget allows. HSAs offer a triple tax break - not only are your contributions made with pre-tax dollars, but earnings accumulate tax-free and qualified medical expenses aren’t taxed. HSAs are also vehicles to save for retirement, as you do not have to use it in the current year and can allow it to grow over time to help pay for future medical expenses.

  • Review Estate Plan – Estate planning is not just for year-end, but it can be a good time to see if any updates are needed on your legal documents which may include a will, trust, health care proxy and durable power of attorney. It’s also a good time to review any retirement plan or IRA beneficiaries on file.

  • Create a Financial Plan – Now is a great opportunity to take a complete view of your finances and create a financial roadmap to your goals if you have not done so already. This means taking a closer look at current cash flow, taxes, investments, insurance, estate planning, etc. At Aevitas, we take a holistic approach to building a comprehensive plan for our clients. Please reach out to our office if you are interested in this service, and we can work together on beginning this process.

Finally, year-end is always a great time for a review meeting to make sure your investments remain in line with your financial goals, especially if we have not yet met this year. If you would like to schedule a meeting, please reach out to us. We will also be sending an invitation in the next few weeks for our Annual Holiday Open House that will be held on Thursday, November 15th. Please save the date. We’d love to see you!

#FinancialPlanning #TaxPlanning #FinancialPlanningWellesleyMass

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