End-of-Year Financial To-Do’s


With the winter holidays just around the corner, the window for making some last-minute tax-saving moves is dwindling. Here are some of my favorite December strategies for managing your tax burden and taking advantage of some underused financial opportunities.

Five Last-Minute Tax-Saving Moves

  1. Max out 401(k)s: If you are enrolled in a workplace 401(k), you have until the end of the year to max out your contributions. Limits this year are $19,000 per person or $25,000 if you are over 50. For those in high tax brackets, and especially those living in high tax states like California, the tax savings from these contributions can be very valuable. If you are self-employed, you have the option to set up and contribute to your own 401(k) [called a Solo 401(k)], but you must do so before the end of the year, even if you don’t fund it until tax time.
  2. Finish gifting to loved ones: You can gift $15,000 to any individual in a given year without having to file a gift tax return. If you make regular gifts to a child or other loved one, make sure to sign that check before December 31. Come 2020, you have another $15,000 that you will be able to gift.
  3. Think charitably: If you are in a rush to make charitable contributions before the end of the year, you may want to consider funding a donor-advised fund (DAF) instead. A DAF is a type of account that allows you to realize a charitable contribution in the year you fund it rather than when you direct your gift to a charity. Realize the tax savings now while giving yourself a little extra time to pick the charities that you want to support.
  4. Consider a Roth conversion: Expecting a low tax year? This may be a year to consider converting some of your traditional IRA money to a Roth. You may pay some tax on the amount that you convert, but depending on your retirement time horizon and goals, a Roth may be a better vehicle for you in the long term. You will never pay taxes again on a Roth, and you also avoid any required minimum distributions, something that is unavoidable with a traditional IRA.
  5. Take losses: Though most of your stock and bond positions may be in a gain position, there may be some that have losses that you can take to offset some capital gains for the 2019 year.

Consult your CPA and financial advisor to see if any of the above applies to your situation.


Share on facebook
Share on twitter
Share on linkedin

What’s your financial archetype?

Simplify your life with a plan

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.