Let’s Talk… Year End Checklist!
As the year is coming to a close, it’s a good time to check a few things to ensure your finances are in order and you’re on track to meet your financial goals.
- Consider converting to a Roth IRA. This is the last year that you can do a back door Roth IRA, if you are ineligible to contribute to a regular IRA. A Roth IRA gives you tax free growth, and the distributions are tax free, if certain conditions are met. If you made a non-deductible IRA contribution, you may need to make sure that it gets converted to a Roth before December 31. Consult a financial advisor or accountant to help you.
- Offset capital gains with capital losses. Take a look at your gain/ loss situation. If you have realized gains, consider selling some investments that are losers to offset your tax burden. Just remember that when you do this, you can’t buy the stock sold for a loss back until after 30 day or it’s considered a wash sale.
- Make sure you’re sufficiently insured. Has your house, property, investments, etc. gone up in value? If so, you may need to adjust your insurance. The biggest thing I’m seeing right now is the need for an umbrella liability policy because people’s investment accounts have gone up so much and their regular liability under their homeowners insurance just doesn’t protect all of their assets.
- Consider estate planning. Have you calculated how much your estate is? Do you anticipate you may soon be subject to estate taxes? If so, it may be wise to start a gifting program to transfer your wealth now. You can give $15K per person per year, and you can give to as many people as you choose, without incurring gift taxes.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual.
