Year-end Tax Planning Strategies


Julie Hall Director of Financial Planning
Julie Hall
Director of Financial Planning

Year-end tax planning is an important component of a comprehensive financial plan. As the third quarter comes to an end, here are tax strategies to consider before December 31.

Savings and Retirement Accounts

Pre-tax retirement plan contributions

Maximize your pre-tax retirement plan contributions and at a minimum, contribute the necessary amount needed to maximize any employer match available to you.

Traditional or Roth IRA

Consider making a contribution to a Roth or Traditional IRA.

After-Tax Savings

Save additional discretionary income into a tax efficient after-tax investment portfolio.

Roth Conversion Strategy

If systematic Roth conversions have been part of your financial plan, a re-evaluation should be considered annually.

Required Minimum Distribution

You generally have to start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 70½. Roth IRAs do not require withdrawals until after the death of the owner. Ensure you take the required minimum before December 31.

Education Planning

Education funding for a loved one is an excellent way to give the gift of education. Due to potential estate and state income tax benefits, consider a 529 plan—a tax-advantaged savings plan designed to encourage saving for qualified higher education expenses.

Charitable Planning

Coordination of your charitable goals with your financial plan is a great way to meet your philanthropic objectives and further impact your financial plan in a positive way. The following are year-end charitable planning considerations:

Highly appreciated stock

Donating from your after-tax investment portfolio can be a great way to meet your charitable planning goals, accomplish portfolio rebalancing needs as well as receive potential tax benefits such as a charitable deduction and avoidance of capital gain tax on the appreciated asset.

Qualified Charitable Distribution

In December 2015, Congress passed a law allowing you to give up to $100,000 to charity directly from your individual retirement account (IRA) when you are over 70½ years old without counting the distribution as taxable income.

Contact your tax professional and Planning Alternatives to determine the best strategy for you.