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What’s Your Plan for the End of the Year?

December 06, 2022
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We are a month away from wrapping up the disaster of 2022.  While I’m looking forward to turning the page, we are definitely not out of the woods just yet.  However, I am seeing a lot of good signs that may be pointing us to a positive market in 2023.  Below are a few thoughts/steps you can take to help your financial plan now and next year:

 

Retirement Planning

With inflation at 40 year highs, the government has raised allowable contribution limits.  Should you have the ability, make sure to adjust your payroll deductions or automatic contributions accordingly:

  • 401K, 403B, most 457 plans - $22,500 (up from $20,500). The catch-up contribution for those aged 50 or older has also been increased to $7,500.  That is a $2,500 increase over 2022.
  • ROTH and Traditional IRA’s - $6,500 (up from $6,000). There is no change to the catch-up contribution of $1,000.

 

Tax Deductions

If you are looking for additional deductions, take a look at charitable contributions.  SEI offers a fantastic donor advised fund that will allow you to make a lump sum contribution to the fund that is deductible.  It can then be donated to various charities of your choice over the coming years

 

ROTH Conversions

If you are concerned that all of your retirement income will be taxable then consider starting an annual ROTH IRA conversion.  Whatever amount you decide to convert will be taxable in that year, however, that money will then grow and be withdrawn tax free from the ROTH in retirement.

 

Estate Planning Review

I’ve written more extensively about estate planning here.  The end of the year is a great time to review your beneficiaries on your retirement accounts.  If your will is not done, you need to make that a priority, particularly if you have children.  Please reach out to me with any questions regarding what documents you need.  

 

Annual Financial Plan Reviews

As I mentioned at the start, 2022 has been a bad year in every area of the markets.  It’s time like these that it’s more important than ever that we revisit your plan, restate your goals and review what your accounts have done and how we are positioned moving forward.  It’s also been a good test of your risk tolerance.  Some of you may have realized your appetite for risk is not as high as you thought.  In that case we can discuss alternative ideas for your investments. 

 

Tax Loss Harvesting

If you manage your own taxable accounts outside of our plan, be sure you are aware of any capital gain distributions coming from your mutual funds.  Most fund families have their estimates on their website already.  It seems hard to understand but you could not only suffer an unrealized loss this year, you could also get hit with a taxable capital gain distribution as well.  You have until year end to potentially sell off a fund, capture that loss and move the same funds into an ETF to keep your market exposure.

 

Home Alone

It’s the best Christmas movie there is.  If you haven’t watched it yet this holiday season, what are you waiting for?  Additionally, if you disagree with this take, we may have to re-evaluate our client-advisor relationship!

 

We still have a few weeks left before year end.  As we know, Christmas colors are red and green…let’s hope the markets lean green this month!  As always, if you have any questions on what I’ve discussed above, please don’t hesitate to call me.  Looking forward to seeing everyone for reviews soon.  Feel free to share this with anyone that may benefit.

 

Rob