President Biden signs executive orders on Jan 21

2020 Year-End Reminders

With 2020 coming to a close, it is important to ensure year-end planning items are completed before December 31. Whether they be for tax-planning, retirement or other financial planning purpose, the following are a few reminders of what you may need to review before ringing in the New Year.

Tax-Loss Harvesting

Tax-loss harvesting is the practice of selling securities in your taxable investment accounts at a loss and buying back the same security or a similar security after 30 days in order to avoid the wash sale rule and take advantage of the loss to limit your total realized capital gains for the year. If you are worried about the amount of realized long-term or short-term gains in your taxable accounts, please speak with a member of our team to discuss options for reducing your realized gains before December 31.

Retirement Plan Contributions and Roth Conversions

If you plan to maximize your contributions to your retirement plan, it is a good time to check your year-to-date contributions to ensure you are on track before December 31. If you need to make changes to your contribution amount, now is the time to update the contribution amount. Keep in mind, the maximum contribution for most employer-sponsored retirement plans (401k, 403b, 457, etc.) is $19,500 for those under age 50. For those who are age 50+, you can contribute an additional catch-up contribution of $6,500 for a total tax-deductible contribution of $26,000. If you plan on contributing to your traditional IRA or Roth IRA, you have until the tax filing deadline to make those contributions.

The deadline to complete Roth conversions is also December 31. So, if you plan on converting some of your traditional IRA assets to your Roth IRA for tax planning purposes, please give us a call today to ensure you have time to complete the necessary paperwork for your Roth conversion.

Charitable Contributions

If you plan to include charitable donations for your 2020 tax return it is  important to make those gifts before year-end. Options for charitable gifting include QCDs, gifting highly appreciated securities, contributions to donor-advised funds and gifting cash. For more information on these gifting options, please read our blog.

For 2020, the CARES Act created a $300 above-the-line deduction for contributions to certain qualifying charities. This can help reduce AGI for taxpayers claiming the standard deduction.

Financial Plan Updates

Now is a good time to schedule a meeting with your financial planner not only to ensure all action items have been completed pertaining to your specific plan. It is also a good time to review your current plan and discuss planning items for next year to have action items in place for retirement plan contributions, tax planning and any other areas relevant to your specific financial plan.

Required Minimum Distributions

With this year’s CARES Act, Required Minimum Distributions are waived for 2020.