All of us can
benefit from taking a step back and reviewing our entire financial picture in a
holistic way. It's also important to consider and plan for what might come next
in relation to our financial plans. At B. Riley Wealth, we care about your financial
well-being, so we've gathered some helpful tips and valuable insights to
consider before year end and in anticipation of starting the new year on the
deadline for implementing investment and tax-related changes to financial plans
for the upcoming year is December 31.
looking at your portfolio for tax efficiency. Obtain a copy of your
year-to-date (YTD) capital gains and losses report from your financial advisor.
In assessing how your investments are performing or underperforming, it's
likely you'll find that some of your holdings have incurred a loss this year
while others have done well. Check your asset allocation, discuss what's
working and what isn't, with your financial advisor, and if appropriate, have
them rebalance your portfolio based on that information.
If there are any
unrealized losses in your holdings, you may consider selling the investment to
write off the loss. You can take losses to the extent of realized gains plus an
additional $3,000 in losses to offset other income. For example, if you have
$35,000 in realized profits, you can take up to $38,000 in realized losses and
show a $3,000 loss on your return to offset other income. It cannot be
overstated, however, that there are stringent rules governing the sale of
investments, and this should not be done without the assistance of your
your Required Minimum Distribution (RMD)
If you use a
retirement account and are 73 years or older, the IRS
requires that every year, you take an RMD from that account. If you have an inherited
IRA, the IRS has waived any penalties in 2023 for not taking the RMD for
beneficiaries who inherited from an individual who had already started taking
the RMD. For individuals who inherited
an IRA from an individual who had not yet begun taking RMDs, the 10-Year Rule still applies.
Review your education savings
Given the cost
of education, you may have opened a 529 savings plan for your child when they
were born. If you haven't already, it's not too late. The 529 savings plan could
be a great tool when you are saving for a child's schooling. There are many
types available, including 529 plans that will fund K-12 education, college,
and graduate school. As a parent, you have ownership of the account and can
name your child as the beneficiary. Verify with your plan administrator for
specific guidance on contribution limits. Generally, if your contributions for
the year are less than the gift tax exclusion ($17,000
in 2023) there is no need to report the contribution as a gift on your taxes.
should review your estate plan on an ongoing basis, including any living trust,
will, or power of attorney. Have you undergone any major life changes over the
past year that require changes in beneficiary designations? Check trust
funding, review trustee and agent appointments, and go over any health care
directives you may have along with powers of attorney in the rare case that you
become incapacitated. Make sure you fully understand what each of the documents
your planned contributions for open enrollment, and max out your current 401(k)
you are a W-2 employee with a 401(k) plan, you could be contributing the
maximum amount allowed annually. That maximum contribution amount in
2023 is $22,500. If
you've met that amount; great. If not, find out if you can add your year-end
bonus check to your 401(k) or adjust your contribution to help meet that
maximum. You won't have to pay taxes on the contributions - until you withdraw
the money in retirement. If you are over 50, you're allowed to put in
an additional $7,500 in catch-up contributions. Talk to your financial advisor
about how you can do so.
can start thinking about your 2024 contributions plan now. The max 401(k)
contribution amount allowed for 2024 is $23,000.
forget to use any Flexible Spending Account funds
If you haven't
used up the funds in your existing FSA, now is the time. Most employers do not
offer grace or carryover periods from one year to the next, consult your
benefits administrator to learn more. Carefully review your eligible out-of-pocket
expenses for the year. If there are any eligible expenses you have not yet
claimed, you should file for reimbursement from your FSA. If there are
permitted medical expenses you can take on prior to the end of the year, book
an appointment now.
your tax withholdings
The IRS now has
an online Tax Withholding Estimator that can
help almost anyone try and predict what their tax bill may be. Are you an
employee who might need to make an adjustment to the amount of money withheld
from your paycheck based on contribution modifications? If you are a business
owner or self-employed, this is one way to try and estimate quarterly tax
payments and plan ahead.
out to your financial advisor
If it's been a
while since you've had a touch-base with your financial advisor, today is a
great day to pick up the phone and give them a call. Ask them: in addition to
this list, what do they see as the most pressing financial tasks to knock out
as the year draws to a close? Schedule a meeting and get moving on your
financial planning for the end of the year and beyond.
Looking for a
financial advisor? We can help with that, too. Click here to find a
B. Riley Wealth financial advisor located near you.
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