Year End Strategies to Consider

Why Year-End Planning Matters

When working with a client who has both winning and losing investments in their portfolio, by harvesting capital losses, they can offset capital gains and potentially reduce their taxable income. This strategy is especially useful for high-income earners who want to lower their tax liability. This is something Inspire Confidence Group reviews with our clients annually. Trying to reduce your taxable income is part of our comprehensive planning process.

Here are a few items to focus on:

1. Maximize Retirement Contributions – Contribute as much as possible to your 401(k), IRA, or other retirement accounts to help lower taxable income and boost savings.
2. Use Tax-Loss Harvesting – Work with your advisor to sell underperforming investments to offset gains and reduce taxable income, while avoiding the wash-sale rule. We approach this strategically, not emotionally, and keep you on the right path.
3. Make Charitable Donations – Contributions to charities can provide tax benefits. If over 70.5, consider Qualified Charitable Distributions (QCDs) from an IRA.
4. Use Up FSA Funds – Spend any remaining Flexible Spending Account (FSA) balance before it expires.
5. Take Required Minimum Distributions (RMDs) – If 73 or older, withdraw the required amount from retirement accounts to avoid penalties.
6. Review Your Finances – Work with your advisor to assess spending, rebalance investments, and adjust financial goals for the coming year.

Final Thoughts

Year-end planning is essential for maximizing savings and ensuring financial stability. Need guidance on your year-end financial plan? I can help you navigate these strategies to make the most of your money.