Year-End Planning

The end of the year is fast approaching and now is a great time to do a quick financial check-up and make sure you are taking advantage of some planning opportunities.  Here are seven items to consider depending on your personal situation:

  • Maximizing your 401(k) (or other company retirement plan) contributions. Contributions to your retirement plan reduce your taxable income while also moving you closer to your future financial goals.  Do you get a bonus in December?  A great use could be to fill up your allowable retirement plan contributions for the year.
  • Use up your Flexible Spending Account money.   Most FSA plans require you to use the money during the plan year.  Some may provide a "grace period" or an amount that can be rolled over into the next year.  Make sure you have used the funds that will expire.  Maybe you could use a new pair of glasses or can get needed dental work done.
  • Confirm whether you have met any required minimum distributions.  Failure to take a required minimum distribution can result in significant tax penalties.  If you want to continue to invest the money you can have the distribution moved to a taxable account.
  • Determine if a Roth conversion would be beneficial to you.  If you are in a lower tax bracket than you may be in retirement is one potential situation where a Roth conversion would be beneficial.  Another may be if you make too much to contribute directly to a Roth IRA and have made non-deductible contributions to a traditional IRA.
  • If you own a business, now is the time to decide if you would benefit from either deferring expenses to next year or accelerating expenses to this year.  Depending on projected income and your marginal tax bracket deductions may be more valuable in one year versus the other.
  • Consider your charitable intent.  Similar to business expenses, it may be beneficial to make contributions planned for next year in December of this year to reduce current year taxes.
  • Review your tax withholding.  If you have had any changes this year such as getting married or having a baby it is wise to review your tax withholding on your W-4.  While getting a tax refund in April is enjoyable it also means you let Uncle Sam borrow your money interest free.

As always please reach out to the Lake Tahoe Wealth Management team with any questions regarding whether any of the above would be beneficial to you.

The Lake Tahoe Wealth Management Insider, - Market and Economic Commentary Q4 2017

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