Last Updated: November 30, 2019

With year-end in sight, it’s a good time to review several important tax-related parts of your financial plan. We have provided a checklist of items you may want to consider.

Are you considering gifts to individuals and/or charitable entities?

Tax laws ebb and flow and recently the value of many itemized deductions has been curtailed. At the same time, the shelter from estate taxes remains large by historic standards, and the ability to gift assets to a range of recipients remains flexible (see our video Are You Gifting the Right Assets? on a popular charitable gifting technique from IRAs). As always, your tax professional is the best resource for specific guidance, but we are happy to collaborate with you and your CPA on gifting, whether via annual gifts to individuals of up to $15,000, larger lifetime gifts, or charitable donations. ‘Tis the season…let us know how we can help strategize on your gifting plans.

Have you taken any Required Minimum Distributions (RMDs) from retirement accounts?

For clients in mandatory distribution mode (beginning at approximately 71 years old), whether you gift all or part of a RMD to charity or take it as a personal distribution, be sure to complete the distribution by December 31. We work with your custodian banks and brokerages to make sure they have the exact amount calculated each year, and we’ll help you get that asset value out of your retirement account in time, thus avoiding potentially stiff IRS penalties for failing to complete the RMD.

Do you have a handle on all your realized gains and losses?

At SBH, we monitor your realized capital gains and losses, and seek to optimize your after-tax investment outcomes. It is important that clients keep their portfolio manager advised of gains and losses, as well as carryforwards, that occur outside of portfolios managed by SBH so managers can incorporate that information into each client’s strategy.

Have you fully funded tax-favored vehicles such as 401(k)s and IRAs?

Consider taking full advantage of the ability to set aside pre-tax dollars any way you can. If you are still working, be sure to round out your maximum defined contribution plan allocation. And even if you already participate fully in 401(k)/403(b) plans, you can also set aside smaller—yet meaningful—amounts in a personal IRA. To the extent you can forgo the current use of the dollars, it’s a great way to build tax-sheltered compounding power over time. Let your portfolio manager know if you’d like to discuss this important area in more detail.

Give credit where credit is due.

With SBH Wealth Management clients across the country, we’ve found that many states offer tax credits for charitable donations to organizations that focus on areas the state is working to promote. For example, Colorado offers the Child Care Tax Credit and the Enterprise Zone Credit and Illinois has the Invest in Kids Credit. By utilizing these types of credits, particularly at a time when many tax deductions have been curtailed or eliminated, clients often find a satisfying combination of reduced tax obligations plus the reward of giving back to their local communities.

Of course, as you think through the checklist, we encourage you to check with your CPA as appropriate before making any final decisions.

The information contained herein is for informational purposes only without regard to any particular reader’s investment objectives, risk tolerances or financial situation and does not constitute investment advice, nor should it be considered a solicitation or offering to investors. For more detailed information about taxes, consult a tax attorney or accountant for advice.