The end of the year is a great time for more than the holiday festivities. You could make and save money by identifying year-end strategies in your financial and investment plan. Some of these strategies are:
Tax deferred accounts: Making contributions to tax deferred and tax-free accounts such as IRA, Roth IRA, 401 (k) and/or 403 (b) plans. Self-employed individuals and business owners can open and fund SEP IRA, solo 401(k) or SIMPLE IRA accounts. If you have a high deductible health plan, you can contribute to a Health Savings Account (HSA), which is triple tax deductible for health expenses. Don’t miss out on the opportunity to contribute to more than one of these plans, depending on your situation.
Charitable giving: Giving to your favorite charity and/or giving gifts to your loved ones in a tax efficient manner. You can front load some of these, for example with a donor advised fund or a 529 plan. Retirees can give to charity in a tax efficient manner and satisfy their required minimum distributions.
Corporate executives could identify potential tax savings by managing their non-cash compensation such as incentive stock options. Company stock in a tax deferred account has a special treatment that may help save significant amounts in taxes.
Investments: This is a good time of the year to perform a portfolio check up to make sure you are appropriately invested based on your risk profile and objectives. Your portfolio could also offer tax loss harvesting opportunities which can be incorporated in your portfolio re-balancing strategy. A portfolio ‘health checkup’ to make sure it is constructed to be able to weather any storm in the markets is always advisable.
Estate planning: Parents and grandparents may want to make sure they have taken advantage of the annual gift exclusion limit and combined it with certain tax favorable accounts such as a 529 plan. The end of the year is also a good time to review estate planning areas such as trusts and estates.
Others: Other tax saving opportunities such as back door Roth contributions, flexible spending accounts etc.
Please reach out to me if you would like to discuss these or other aspects of comprehensive financial planning. My firm is an independent, fee only adviser that works in the best interest of the client. We embrace complexity and simplify it to provide a reliable plan.