{"id":36934,"date":"2023-11-24T16:01:54","date_gmt":"2023-11-24T16:01:54","guid":{"rendered":"https:\/\/microloannexus.com\/investing\/year-end-money-moves-to-make-now-according-to-financial-advisors\/"},"modified":"2023-11-24T16:01:55","modified_gmt":"2023-11-24T16:01:55","slug":"year-end-money-moves-to-make-now-according-to-financial-advisors","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=36934","title":{"rendered":"Year-End Money Moves to Make Now, According to Financial Advisors"},"content":{"rendered":"
For people who are in their 70s, use your family\u2019s holiday gathering to discuss your end-of-life wishes. Walk the kids through who your healthcare power of attorney is, what your planning desires are. It might be, \u201cWe want to age in place, and we\u2019re going to move to a retirement community in 10 years.\u201d It\u2019s an opportunity for everybody to sit down and have a conversation about what your plans are as an aging parent so that your kids have transparency. They can ask questions and make sure that what you want to have happen will happen. You need to have those conversations, but we all live scattered lives, and I don\u2019t think it\u2019s something you want to do by Zoom. And it\u2019s not something you should ignore because your kids might be anxious about it.<\/p>\n
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Also, use your family\u2019s holiday gathering to preserve family stories from all generations. <\/p>\n
StoryCorps is a great way to capture those memories, and you can keep it private if you want, but you can also make it part of the public archive. To me, that\u2019s part of planning. We all have our financial capital, but we also have our family capital. And our family capital is partly stories and values and culture.<\/p>\n
On a more practical note, if you\u2019ve had a high medical-expense year, consider an IRA distribution that\u2019s above the required minimum to fully utilize the lower income-tax bracket that deducting all those expenses likely put you in. And if you don\u2019t need the funds, convert them to a Roth IRA for your kids.<\/p>\n
Harvest Those Bond Losses<\/h4>\n
Patrick Fruzzetti, managing director, Rose Advisors (Hightower)<\/strong><\/p>\n
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<\/div>\n \n Photography by David Beyda Studio \n <\/span> \n <\/figcaption><\/figure>\n<\/p><\/div>\n
We\u2019re reminding clients that for the first time in years, you can now use bonds for tax-loss harvesting because of their recent losses. <\/p>\n
In terms of gifting, for clients who are in the age range for required minimum distributions, making a qualified charitable distribution can be wise. [QCDs allow individuals age 70\u00bd and older to donate up to $100,000 from an IRA directly to a charity, reducing taxable income.] Also, beginning this year, individuals over age 70\u00bd can fund a charitable remainder trust with a one-time $50,000 contribution from an IRA. The biggest benefit is that you\u2019re not paying income tax on the distribution, while you\u2019re still fulfilling the annual distribution requirement. That\u2019s huge, and you\u2019re also satisfying a charitable commitment.<\/p>\n
We\u2019re also educating clients on things like donor-advised funds and are always reminding them to consider donating appreciated assets, such as appreciated stock in particular, especially when you have positive years like we\u2019ve had this year.<\/p>\n
In addition, people sometimes forget annual gifts. Be sure to get them out to children or other family members. [The 2023 gift-tax exclusion of $17,000 per recipient can go to an unlimited number of recipients.] <\/p>\n
Double Up on 529s<\/h4>\n
Matthew Spradlin, wealth manager, Godfrey & Spradlin, Private Wealth Advisory of Steward Partners<\/strong><\/p>\n
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\n \n <\/div>\n \n Courtesy of Godfrey & Spradlin Advisory of Steward Partners \n <\/span> \n <\/figcaption><\/figure>\n<\/p><\/div>\n
By opening two 529 plan accounts for each child, one for each parent, you can often double the amount of state tax deduction. The rules in each state are a little different, and some don\u2019t allow this option. But for example, I\u2019m in Virginia, where each individual gets up to a $2,000 income-tax deduction for contributions to a 529. Using myself as an example, we have a 9-year-old son, so we have a 529 in my name, and we have a 529 in my wife\u2019s name. She\u2019s the owner of hers, and I\u2019m the owner of mine, both with our son as the beneficiary. So we get to double up those deductions to get a $4,000 state tax deduction. And you can front-load a 529 for up to five years\u2019 worth of the annual gift exclusion. In 2023, that\u2019s $17,000, so up to $85,000 for individuals or $170,000 per couple, per child or beneficiary. <\/p>\n
Another piece of advice I\u2019m giving is to create what\u2019s called a Uni-K plan [also known as an individual 401(k)] for 1099 sole proprietors. You may be able to take advantage of the 2023 contribution limits\u2014$66,000 plus a $7,500 catch-up contribution if you\u2019re over age 50\u2014by contributing as both employee and employer. The contribution limit for 2024 will jump to $69,000 plus the potential catch-up contribution. I have a client who\u2019s earning $750,000 in annual income as a consultant. We\u2019re fully funding the Uni-K, and he\u2019s doing it as a pretax contribution. You can also do after-tax contributions to a Roth-type Uni-K. In either case, you cannot have any employees except for your spouse. And as always, you should consult both financial and tax advisors.<\/p>\n
Give With Expectations<\/h4>\n
Indrika Arnold, senior wealth advisor, The Colony Group<\/strong><\/p>\n
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\n \n <\/div>\n \n Courtesy of The Colony Group \n <\/span> \n <\/figcaption><\/figure>\n<\/p><\/div>\n
When we talk to client families of multigenerational wealth about family gifting, we review the capacity to gift. But the conversation also includes gifting with a purpose and discussing expectations around the gift. We share a book with our clients called The Cycle of the Gift: Family Wealth and Wisdom<\/em>. It talks about the intent of the giver and also the spirit with which the receiver receives it.<\/p>\n
Say we have a client who makes an annual gift every year, who\u2019s going to write a $17,000 check to each of their children. It could happen automatically, and the children may just expect the gift to show up. There\u2019s no connection there in terms of what the gift is for. But having a meeting between the giver and receiver can allow the giver to express what the intent of the gift is and what they want to come out of it. The gift isn\u2019t merely a tax write-off [aimed at taking advantage of the annual gift-tax exclusion].<\/p>\n
We work with one family that regularly makes significant gifts to their children. We facilitate family meetings where they share information with each other about how they\u2019re using their gifts. The parents have set expectations, and every year they check in and get a lot of joy by seeing what comes out of the gifts they\u2019ve made. We have another client who gives a certain amount every year to support a family member\u2019s education. We asked her if she had thought about getting feedback from the student about how they are doing in school, and she said she hadn\u2019t. We now hear from her about how the student pays regular visits to tell her all about what\u2019s going on in school. That conversation makes the gifts more meaningful to the giver and the receiver.<\/p>\n
Mind Those Mutual Fund Distributions<\/h4>\n
Mark Mumford, managing director, Hollow Brook Wealth Management<\/p>\n
If you own mutual funds or ETFs, go through and look at what the potential capital gains distributions are going to be. A lot of those funds do have appreciated securities, given that we\u2019ve had a fairly strong bull market over the past 14 or 15 years. Even in down years like last year, a lot of these active strategies are still producing capital gains. Also be mindful if you\u2019re contemplating adding to a mutual fund that\u2019s going to make a sizable capital gains distribution: Doing so over the last couple of months of the year can be tax inefficient.<\/p>\n
I also suggest reviewing your investment results in the context of your overall objectives and financial plan. While it\u2019s really convenient to review performance on an annual basis, I encourage clients to judge results over long periods to appropriately frame progress toward meaningful, longer-term goals.<\/p>\n
Finally, using the annual gift-tax exemption and giving appreciated securities can be a powerful way to build a portfolio and do generational or legacy planning. And you don\u2019t need to be an ultrahigh-net-worth individual to do that. Depending on who you\u2019re gifting it to, there could be a tax arbitrage opportunity: Maybe the recipient is in a lower bracket than the one you would be selling the securities at. And you could even use some of next year\u2019s gift exemption to help that child pay for the capital gains. <\/p>\n