2023 Year-End: 5 Financial Planning Reminders
With 2023 coming to a close, it is important to ensure year-end planning items are completed before December 31. Whether they be for tax-planning, retirement or other financial planning purposes, the following are a few reminders of what you may need to review before ringing in the New Year.
Tax-loss harvesting is the practice of selling securities in your taxable investment accounts at a loss and buying back the same security or a similar security after 30 days in order to avoid the wash sale rule and take advantage of the loss to limit your total realized capital gains for the year.
Retirement Plan Contributions and Roth Conversions
If you plan to maximize your contributions to your retirement plan, it is a good time to check your year-to-date contributions to ensure you are on track before December 31. If you need to make changes to your contributions, now is the time to update the contribution amount. Keep in mind, the maximum contribution for most employer-sponsored retirement plans (401k, 403b, 457, etc.) is $22,500 for those under age 50. For those who are age 50+, you can contribute an additional catch-up contribution of $7,500 for a total tax-deductible contribution of $30,000. If you plan on contributing to your traditional IRA or Roth IRA, you have until the tax filing deadline to make those contributions.
The deadline to complete Roth conversions is also December 31. So, if you plan on converting some of your traditional IRA assets to your Roth IRA for tax planning purposes, please give us a call today to ensure you have time to complete the necessary paperwork for your Roth conversion.
Tip – Most custodians have internal processing deadlines before 12/31, so you’ll want to avoid waiting until the last minute for these year-end requests!
Required Minimum Distributions and Qualified Charitable Distributions
The deadline for your Required Minimum Distribution is December 31, so if you have not yet made your distribution, now is a great time to make sure your withdrawal is taken. If you do not plan on needing to use the RMD for living expenses and you are charitably inclined, a great alternative is the qualified charitable distribution (QCD). You may contribute all or some of your RMD to a qualified public charity in order to take care of your charitable gifting for the year and avoid paying tax on the withdrawal.
It is important to make any gifts before year-end if you plan on itemizing deductions to include charitable donations for your 2023 tax return. Options for charitable gifting include QCDs, gifting highly appreciated securities, contributions to donor-advised funds and gifting cash. For more information on these gifting options, check out our blog on charitable gifting.
Financial Plan Updates
Now is a good time to schedule a meeting with your financial planner not only to ensure all action items have been completed pertaining to your specific plan. It is also a good time to review your current plan and discuss planning items for next year to have action items in place for retirement plan contributions, tax planning and any other areas relevant to your specific financial plan.
The Burney Company is an SEC-registered investment adviser. Burney Wealth Management is a division of the Burney Company. Registration with the SEC or any state securities authority does not imply that Burney Company or any of its principals or employees possesses a particular level of skill or training in the investment advisory business or any other business. Burney Company does not provide legal, tax, or accounting advice, but offers it through third parties. Before making any financial decisions, clients should consult their legal and/or tax advisors.