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Some things to think about for year end…

December 14, 2021
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With only a few weeks left until we see 2022, there were a few things I wanted to bring to you in order to make sure we are prepared:

  1. 401K and 457 deferral limits.  Limits have been raised to $20,500 (up from $19,500 in 2021).  If you are currently maxing your contribution make sure you adjust upwards to take advantage of the extra $1,000.  SEP contribution limits have also been raised to $61,000 (up from $58,000 in 2021).  Keep in mind that both your SEP and IRA contributions (not your 401K) can be made up until April 15th, 2022.
  2. Catch up Contributions. If you are turning 50 in 2022, make sure you adjust for your now allowable “catch up” contribution.  In addition to the $20,500 mentioned above, those 50 and older can contribute an additional $6,500.
  3. While you are looking at your retirement account, be sure to review your beneficiary information.  Remember that your beneficiaries listed will ALWAYS trump your will.  Don’t rely on your will alone to take care of all your wishes.
  4. Will Documents. Since I brought it up, review your will for potential updates.  Ensure you have your will, living will with health care proxy and durable Power of Attorney.  Ensure that your loved ones know where a copy is stored.  You can also store your will electronically on your Emoney client site so that I can access it for your loved ones as well.  As always, if you need an introduction to an attorney, please let me know.  See my guest blog from Phil Tobolsky for some more details on estate planning.
  5. ROTH conversions. There is a lot of talk about the elimination of this provision with President Biden’s tax proposal.  While nothing is finalized, if your income seems lighter than last year and/or you want to take advantage of this before it may be eliminated, please contact me immediately.  Roth conversions allow you to convert your Traditional IRA to tax free Roth income for retirement.  While you will pay income tax on the amount that you convert, having diversity in your tax structure in retirement is a great planning tool.
  6. Tax Loss Harvesting. If you have been having fun playing the market on your Robin Hood app and you have some losers, you may want to consider selling to benefit from a capital loss.  You can take advantage of up to $3,000 in capital losses yearly.  Game Stop is not where it was in June….wonder who wrote about that??
  7. Charitable donations. If you have appreciated assets that you are concerned about or you are feeling philanthropic, we have access to Donor Advised Funds.  DAF’s allow you to make a charitable contribution without immediately deciding where it should go, while immediately realizing the tax deduction.
  8. Gifting strategies and 529. You are still allowed to gift $15,000 per year per person without tax consequence.  There is also an acceleration provision with 529 plans in which you can take advantage of up to 5 years in a single gift.  See if grandma and grandpa are feeling generous this Holiday season!!

If you have any questions about any of the above please don’t hesitate to reach out to me.  As always, feel free to share this with people in your life.