A Potpourri of Year-End Planning Ideas

Holiday "gift bags" filled with last-minute ideas for investors' year-end planning | Sheaff Brock

A Potpourri of Year-End Planning Ideas

Just as retailers—and etailers—are out in force with eleventh-hour holiday gift ideas, financial companies are offering “gift bags” filled with last-minute ideas for investors’ year-end planning. And, while it’s never too late for financial planning, there are certain December deadlines and cutoff dates, as Kiplinger.com details:

Required Minimum Distributions from IRAs, 403(b)s and 401(k)s must be completed by December 31. However, for the year in which you turn 70.5, you may defer your first RMD until April 1st of the following year.

Contributions to retirement plans
While the deadline isn’t until the 31st, payroll dates and HR procedures vary; employees must leave enough time for year-end contribution changes to be implemented. (2019 limits for workers under 50—$19,000. Those 50 and up can add $6,000 in “catch-up” contributions.)

529 contributions
The cutoff for donations to these educational accounts is December 31st. Keep in mind gift tax limits when making contributions.

Tax loss “harvesting”*
Harvesting losses involves selling an investment position for a loss to generate a tax deduction and offset other investment income. Securities that have been held 12 months or longer are long-term; those held for less time are short-term. Deadline is Dec. 31.

Roth conversions
Conversions of Traditional IRAs to Roth IRAs must be completed by Dec. 31.

Charitable contributions
While the deadline is the 31st, organizations need time to process your donation, particularly if the contribution is in the form of appreciated securities. For many institutions, therefore, the cutoff may have already passed.

In keeping with the holistic approach we believe in at Sheaff Brock, a year-end financial planning assessment sets the stage for each investor to strategize in the year to come. In certain cases, “non-traditional” advice turns out to be most appropriate. For example, Sheaff Brock Senior Portfolio Manager JR Humphreys suggests that, with the current low rate environment for municipal bonds, preferred equity can be a way to increase after-tax income, while Senior Vice President Christy Jordan explains that in certain situations, it may make sense to reverse the direction of tax harvesting, using gains to offset long-term losses rather than the other way around.

*Sheaff Brock does not offer tax advice, instead working in cooperation with investors’ tax advisors to coordinate investment planning and tax strategy.

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