Year-End Planning
As year-end approaches, it is important to address any unresolved planning or tax issues for 2019 and ensure you are on track for 2020.
Year-End 2019 Planning Opportunity Checklist
Now is an ideal time to review year-end tax strategies and plan for the year ahead. Below are some important items that should be completed or reviewed before year-end:
- Required Minimum Distributions – If you are over the age of 70.5 in 2019 or have an inherited IRA, you will be required by law to take your Required Minimum Distribution by year-end.
- Year-end Charitable Gifting – If you have not already done so, review your 2019 charitable goals to ensure you are accomplishing your goals in a tax-efficient manner. There are several strategies depending on specific circumstances that a WESCAP advisor can recommend depending on your situation.
- Roth IRA Conversions – If you expect to be in a low-income tax bracket this year, now may be a good time to make Roth IRA conversions. High-income taxpayers with little or no pre-tax IRA assets can also make non-deductible IRA contributions and later convert these funds to a Roth IRA (known as a backdoor Roth IRA conversion).
Year-End 2019 Investment Strategies
- Harvest Losses – As we approach the year’s end, it can be productive to harvest losses in your portfolio to offset potential capital gains or to generate capital loss carry forwards.
- Avoid Large Capital Gains – Review mutual fund holdings and look to avoid significant year-end capital gains distributions by selling these funds prior to record date. Additionally, you should avoid purchasing some mutual funds toward the end of the year, instead using ETFs to avoid capital gains distributions.
- Harvest Tax-Advantaged Capital Gains – If individuals have low enough taxable income, it may be prudent to harvest capital gains, as federal capital gains tax rates may be as low as 0%.
General Planning Opportunities
- Qualified Charitable Donations – This may not apply to all; however, due to the change in tax law and the loss or limitation of certain itemized deductions, some charitably-inclined individuals may choose to accomplish their charitable goals through donations out of their IRA, utilizing a portion, or all, of their Required Minimum Distribution, up to $100,000.
- Gifting – Discuss a “bunching” strategy for gifting due to tax law changes to ensure you are maximizing the tax benefits for your charitable donations.
- Retirement Projections – WESCAP Group offers retirement income projections to ensure you remain on track to meet your long-term goals. We recommend this for individuals who are currently concerned about their long-term financial security or are expecting significant life or financial changes in the near future.
- Social Security Analysis – If you are approaching 62 and would like to discuss the optimal strategy to begin taking Social Security benefits, WESCAP can assist in making this decision.
- Education Funding – Set up and fund a 529 account for your child or other relations. You can contribute up to $15,000 per donor per child this year, or even super-fund an account with up to $75,000 in funding per recipient in your first year of funding.
As always, these specific planning items will not apply to everyone. It is important to discuss these opportunities and strategies with a financial advisor and the advisors at WESCAP Group are available to assist in any year-end financial planning needs.
Please let us know if you have any questions about these items or if you would like to schedule a time to talk about your specific situation with a WESCAP advisor.
Kind regards,
WESCAP Group