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5 Year-End Financial Moves

Alex LaRosa, CFP®

Alex LaRosa, CFP®

Investment Advisor Representative

November 21, 2019

5 Year-End Financial Moves

As we move towards the end of the year, here is a list of financial moves you can make to help lower your taxes, increase your savings, and ensure you are on the right path to retirement.

1. Maximize your tax-deferred contributions

Maxing out tax-deferred accounts like 401(k)s, 403(b)s, and traditional IRA’s can help lower your taxable income for 2019. The maximum contribution for a 401(k) this year is $19,000 for someone under 50. If you are over 50 you will be eligible for a catch-up contribution of $6,000 totaling $25,000 for 2019. If you are still eligible for a traditional IRA, you have until April 15th to make contributions. 2019’s IRA limits are $6,000 for under 50 and $7,000 for over.

2. Make Charitable Contributions

Donating to charity before year-end can also help lower your tax bill for 2019. If you itemize deductions and keep proper records of contributions, the IRS will allow you to deduct up to 50% (60% if made in cash) of your Adjusted Gross Income (AGI). There are varying rules when reporting charitable contributions on your tax return and you should consult your accountant to see how it may affect your tax bill for 2019. We have written before on our blog about different charitable gifting methods that may benefit you.

3. Harvest your losses

Tax-loss harvesting is when you sell losing investment positions that have losses in order to offset any gains that you may have. Although losses will be difficult to come by this year it is still important to evaluate your portfolio. Selling stocks, bonds, or mutual funds that have lost value before December 31st will reduce the taxes you pay on capital gains from winning investments. Losses must first be applied to investment gains but if you have losses, you may be able to use up to $3,000 to offset ordinary income. If you still have losses after applying them to capital gains and ordinary income for 2019, you can carry forward the losses for use in future years until you use them all.

4. Don’t forget to take your Required Minimum distribution (RMD)

If you are over age 70.5 you are required by the IRS to take s specific amount out of your qualified retirement plans every year. This number is calculated using the previous years ending balance, your life expectancy, and the life expectancy of any beneficiaries. Forgetting to take your RMD before the end of the year can result in paying a penalty of up to 50% of the amount to be taken. For those that are feeling philanthropic, you can read here about gifting your RMD to charity.

5. Review your plan to ensure you are on track with your goals

Annually reviewing your financial plan will help ensure that you are on track to achieve your goals for retirement.  Take this time to calculate any additional spending, income, or savings from 2019. Most importantly, sit down and review your portfolio. Everyone’s financial needs are different, and their investments should be suited to them. 

If you have questions about any of these steps or would like a complimentary review of your investments, we would be happy to help. Give us a call at 610-825-3540 or use the Speak to an advisor to find a time that works for you.

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5 Year-End Financial Moves

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