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Year End Financial Review and Planning Checklist

Posted by Doug Hutchinson | CFA®, Director of Research and Trading

December 9, 2021

Before the year ends, take some time to review your financial health. Here are 10 financial planning items to review before 2021 comes to a close.  

 1.  Take your Required Minimum Distribution 

 Required Minimum Distributions (RMDs) were temporarily suspended for 2020 due to COVID-19 relief legislation but RMDs are back for 2021 and beyond. 

If your 70th birthday is on or after July 1, 2019, you will have to take an RMD from your retirement account prior to December 31st once you reach age 72 in most situations.1 

Note that Roth IRAs do not have RMDs. Consult with your financial advisor to determine the exact amount of the RMD that you need to take before December 31st. 

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Retirement Planning Taxes Tax Planning Financial Planning

4 Ways the New Tax Law Can Reduce Your 2018 Taxable Income

September 19, 2018
A recent survey from the American Institute of CPAs found that 63% of individuals who either have $250,000 in investable assets and/or $200,000 in household income were likely to tweak 2018 financial planning strategies as a result of the new tax law. Most of the respondents indicated that ‘tweaking’ their financial plans would be in an effort to reduce taxable income, and the 2018 Tax Cut and Jobs Act offers a few new methods to do just that.¹ Here are four: Lump Your Charitable Contributions Together – in the new tax law, the charitable giving deduction has remained in place for taxpayers who itemize. The thing is, however, that many taxpayers are expected to take the standard deduction in 2018 instead of itemizing, since it has jumped to $12,000 for individuals and $24,000 for married couples. One method to get over the standard deduction, however, would be what many CPAs call “bunching,” or making a few years’ worth of charitable donations in a single year. That way, you could itemize your deductions in one year, and perhaps take the standard deduction the next. [+] Read More

What’s the Best Way to Make Tax Efficient Gifts to Adult Children? – Doug’s Quiz Corner

March 16, 2018
Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug helps you navigate tax efficient gifting strategies to help a friend transfer wealth to his adult son for school tuition and a future home purchase. Consider this Scenario: Your friend Gus is considering helping his son, Walter, with the cost of paying tuition and purchasing a new home over the next couple of years. Walter has two years of school left (including this year) and he is planning to purchase a home next year. [+] Read More

The Final Tax Bill – Special Report

December 28, 2017
On December 22, 2017, President Trump signed into law the tax legislation known as the “Tax Bill.” The majority of the tax law’s provisions go into effect in January with just a handful delayed until 2019 or after. The signature provision of the law – and where the biggest tax cut was dealt – fell to corporations, where the tax rate was cut from 35% to 21%. A cut this sizable could have a direct impact on corporate earnings, which could flow-through to stock prices in the near to medium term. [+] Read More

What Will the Final Tax Legislation Look Like?

December 11, 2017
The Senate and the House have passed their own versions of tax reform, but the work of making tax reform law is far from over. From here – and perhaps over the next few weeks – a conference committee of House and Senate Republicans will convene to try and iron out the differences between the two bills. This reconciliation process is no layup, but conference committee proceedings also rarely fail. The bigger question at hand may not be if Republicans can get tax reform done. But rather: can Republicans have a bill on the president’s desk by Christmas? Time will tell. As the debate rolls on in Congress, we thought it’d be a good opportunity to look at some of the key features of the bills – what they have in common, and where the biggest differences lie. [+] Read More

Tax Planning: Don’t Forget Your Required Minimum Distributions

November 15, 2017
Republicans on Capitol Hill are currently working to make major changes to the tax code, but one tax rule does not seem likely to change anytime soon: required minimum distributions (RMDs). For most of our lives, investors have the benefit of saving into IRAs, 401(k)s, 403(b)s, etc. with tax-deductible contributions and tax-free growth, but eventually the day comes when Uncle Sam gets his cut. That starting point when the IRS requires you to withdraw from your IRA or other retirement account for is by April 1 of the year following the calendar year in which you reach age 70½ (which is 6 months after your 70th birthday). For example, if you are retired and you turned 70 on June 30, 2017, then December 30, 2017 marks the day you reach 70 ½. That means you must take your first RMD for 2017 by April 1, 2018. Every year thereafter, you have until December 31 to get it done. [+] Read More

Tax Prep: Gifting Strategies

November 1, 2017
With less than two months left in the year, time is running out to take actions that will apply to the 2017 tax year. By ‘actions’ we mean things like charitable giving, tax loss harvesting, and in the case of this post, gifting. Gifting and estate planning can be complex undertakings, due to the myriad of rules, strategies, and even loopholes involved. But the concept of gifting by itself can be rather simple: in 2017, you can give any number of people (it doesn’t matter how many) up to $14,000 in cash or other property without triggering any gift tax. If you include your spouse in the gift, that number jumps to $28,000. An example with actual numbers should underscore just how impactful gifting can be. Say for example that you and your spouse make annual gifts of $28,000 to each of your three children and seven grandchildren. Over a period of 5 years, you will have gifted $1,400,000 – which also reduces the value of your estate for tax planning purposes by $1,400,000. Assuming the federal estate tax rate of 40%, that could mean saving $560,000 in estate taxes (40% x $1,400,000). [+] Read More

What is Tax Loss Harvesting?

October 25, 2017
The White House released an outline for major tax reform in September. There are some ambitious goals in the plan: reduce seven individual tax brackets down to three, lower the corporate tax rate by 15%, eliminate the estate tax, nearly double the standard deduction while eliminating most itemized deductions, and much more. There could be some major changes ahead. But since so much remains up in the air as Congress debates the issue and actually writes the new law, it may not be worth diving into the details just yet. Instead, we’ll focus on a tax issue that is fast approaching for many investors: tax loss harvesting in preparation for your next tax filing. [+] Read More

An Initial Look at Trump’s Tax Reform Framework

September 28, 2017
After campaigning hard for the importance of tax reform, President Trump and his advisors released an early stage tax code change framework on Wednesday, September 27. From his podium in Indianapolis, IN, Trump explained that his framework would cut taxes for businesses and individuals and potentially deliver a “middle class miracle.”[1] As he put it, “…we will cut taxes for the everyday, hardworking Americans…”[2] While the House and Senate will still have significant work to do to in order to finalize the tax plan and craft new legislation, the initial review of Trump’s framework has some substantial changes to the current tax law, which could represent the largest tax reform change passed in 30 years.[3] [+] Read More

5 Things to Know about Health Savings Accounts

August 30, 2017
With all the hoopla about health care over the last several months, you may have heard the term “Health Savings Account” tossed around here and there. In short, Health Savings Accounts (HSAs) are tax-exempt accounts available for people in certain high-deductible health plans. Since people with high deductible health plans by definition incur significant out-of-pocket expenses before the insurance kicks-in, HSAs allow them to plan ahead by socking away money in a tax advantaged way.2 Think of it as having a savings account for your medical needs. As we will cover below, however, HSAs are not for everyone, and there are other features you should understand if you’re exploring them as part of your plan. Here are five of those features: [+] Read More