Some To-Do, Not-To-Do, and ‘It Depends’ Items for Your Year-End List

Sheaff Brock Investment Advisors - Year-end planning strategies

Some To-Do, Not-To-Do, and ‘It Depends’ Items for Your Year-End List

As the fall season sets in, there are certain end-of-year planning techniques you can begin implementing, financial planning professional Paul Coan reminds Sheaff Brock investors. There are some not-to-do items as well, Coan adds, and some “it depends” tactics that may or may not prove best given your individual situation.

Since several, although not all, of these checklist items involve tax planning, there are a couple of cautions: Speak with your CPA or other tax advisor before implementing any tax-related strategy. This is particularly true if you are subject (or close to being subject) to Alternative Minimum Tax.

1. HARVESTING INVESTMENT LOSSES

To-do:
Sell taxable investments that have declined in value to help offset capital gains you’ve realized during the year. Short-term losses are best for offsetting gains.

Not-to-do:
For at least 31 days after you’ve sold a security at a loss, don’t buy the same security back. (The IRS will consider that a “wash sale”.)

2. PAYING AHEAD AND GETTING PAID LATER

To-do:
Pay your fourth quarter state income tax this year. Pay medical bills now. Ditto for alimony payments. Schedule and pay for elective medical procedures before year-end to increase qualified medical expenses. Pay next year’s insurance premium in advance (you must do this directly, not through payroll deduction).

Not-to-do:
Don’t accept that year-end bonus you have coming. (Defer it into next year.) Don’t sell capital gain property now.

3. MAXIMIZING IRAs AND 401(k)s

To-do:
Catch up (using the over-50 catchup rules) your 401(k) and other retirement plan distributions.
Consider converting from a Traditional IRA to a Roth. If you are over 70 ½ years old, take your Required Minimum Distribution before year-end.

Not-to-do:
Don’t take IRA withdrawals if you are under age 59½.

While year-end tax planning strategies might help you reduce your bill for 2016, the best tax strategy is a comprehensive financial plan that you work on with your advisors year-round, Paul Coan, CFP,® ChFC, CEA,® reminds Sheaff Brock clients.

In his first book, “Asset Protection & Wealth Preservation: A Guide to Help You Avoid Common & Costly Mistakes,” Coan delves deeper into these and other to-do, not-to-do, and “it depends” tactics for investors. And he’ll do the same when he is our speaker at the December Knowledge Builder webinar on Financial Planning Basics, offered exclusively to Sheaff Brock investors.

Contact Sheaff Brock at 866.575.5700 or info@sheaffbrock.com if you are interested in attending our Knowledge Builder webinar on December 15, 2016.

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