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Created: December 23, 2020
Modified: June 6, 2023

Podcast Episode 180: End-of-Year Planning Items

What You’ll Learn:
As we approach the end of the year, it’s important to review a handful of key items before the calendar turns to January 1. Use the list we provide on this episode to help you get your finances in order and make some planning decisions.

We’re probably all ready to put this year behind and get a fresh start in 2021, but we do need to look at a few things before December is over.

On this episode of the Money Wisdom podcast, Joel will run though a list of planning items that always come up this time of the year as we think about taxes, tax planning, and maximizing contributions. Let’s take a look at each of the items on the list and make sure you listen to the full episode to get Joel’s complete explanation.

Maximize Your Contributions

It’s time to review your retirement accounts and see how close you are to maximizing your contributions. Some accounts require you to put the money in before the end of the year while others let you carry those contributions into the next year. Either way though, you always want to save as much as you can.

Not only are you trying to build your nest egg, but you can also save yourself money by through tax deductions depending on which account you’re contributing to. Make sure you have that conversation with an advisor. Bottom line is to max your 401k before the end of the year if you are able.

Review the CARES Act and Related Relief

We don’t need remind you how difficult this year has been from a variety of perspectives, but what you should be reminded about is the CARES Act. It was part of the pandemic relief and there are a few planning considerations that came from it.

The first big thing is withdrawing money from retirement accounts without penalty. The other significant change is the removal of required minimum distributions for the year. If you haven’t pulled out that money yet, remember that it’s not required. The third thing is changes to inherited IRAs and the rules around withdrawals for your beneficiaries. Each of these present planning opportunities to discuss with a professional.

Tax-Loss Harvesting

Tax loss harvesting is next on the list. This is simply realizing your losses in a portfolio. This doesn’t apply to retirement accounts but rather brokerage accounts or others that aren’t sheltered. Many people hold onto their losers and sell their winners, but in many cases it should be the opposite.

Use this as an opportunity for a fresh start. Are there losses in your portfolio that you could take now and reset for the new year?

Charitable Contributions and Tax Deductions

This is the time of the year where the spirit of giving kicks in for many, and many organizations need the help more than ever after 2020. You’ll want to be thinking about these and also figuring out if any tax benefits will come from it so that they’re accounted for because that’s not always going to be the case. In Connecticut, you don’t receive a deduction for those charitable donations, which is a debate for another day.

Is It Time for a Roth Conversion?

Take some time now to determine if a Roth conversion makes sense for you. This is even more true this year as we watch to see how the Georgia Senate race will finish up. It could go a long way towards determining the future of tax rates and capital gains taxes. So it might be a great time to pay taxes on these investments now to avoid a higher tax bracket later on.

Even without knowing whether you’ll be paying more in the future, having this money in a Roth still gives you the control over tax-free money in retirement.

As with all of these planning decisions, we offer you the opportunity to set up a complimentary Money Map Retirement Review so reach out if you’re interested.

[0:59] – Item 1: Maxing out retirement contributions

[3:11] – Item 2: Review the CARES Act and the related relief

[6:58] – Item 3: Tax Loss Harvesting

[8:54] – Item 4: Evaluating charitable contributions and tax deductions

[10:48] – Item 5: Roth conversions

[12:16] – Money Map Retirement Review

Thanks for listening to this episode. We’ll be back again next week for another show.

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