What Financial Issues Should I Consider as Year-End Approaches?

November means the end of the year is almost upon us.

Do we really have just two months before 2017?

Yes, we do.

According to The (Hot Springs, AR) Sentinel-Record article “Check this list -- twice -- before year-end,” you should schedule an appointment with your professional advisor to discuss your long-term investment goals.

What are factors could affect your goals?

RMDs.

If you have a traditional IRA, you will need to take required minimum distributions (RMDs).

Failing to do so will incur you a 50% penalty on the amount you did not take.

Talk with your advisor about whether these options would be valuable for you.

Set your RMD to be withdrawn automatically.

Avoid being penalized because you merely forgot.

Delay your first RMD.

The first year you are required to take an RMD is the year you turn 70 ½; however you can delay this until April 1 of the following year.

The caveat?

You must take two RMDs the second year, possibly placing you into a higher tax bracket.

Transfer your RMD to charity.

You could avoid having your RMD counted toward your adjusted gross income by transferring up to 100,000 from your IRA to qualified charities.

A win-win.

Tax harvesting.

What is tax harvesting?

Tax harvesting involves offsetting portfolio gains or establishing a deduction up to $3,000 by selling a losing an investment.

If the loss is great enough, it could be rolled over into the future.

What should you consider?

• Reduce short-terms gains first because they are taxed at a higher rate.
• Harvesting losses should not compromise your long-term investment strategy.
• Remember, new purchases prior to or after a security sale can be impacted by “wash-sale” rules.

Wash Sale.

You may be asking, “What is ‘wash-sale’?”

There is a 30 day window after selling a security at a loss where a purchase of a “substantially identical” security would disallow your loss deduction.

In short, you would cancel out your loss.

Income and deductions.

Being close to a higher tax bracket means small changes could bump you up.

What should you do?

Work with your advisor to reduce some of your taxable income before 2017.

How?

Give to a charity.

Accelerate deductions.

Defer income.

Contribute to a 401(k).

Review your income sources.

Life Changes.

Any change in life will affect your estate plan and your finances.

If you moved to a new state or welcomed a new family member, you will want to make the necessary adjustments.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: The (Hot Springs AR) Sentinel-Record (October 8, 2016) “Check this list -- twice -- before year-end”