It’s almost here… 2019! Following are a few of the things that you should be considering before year end.
RMD’S:
For those of you who are 70.5 or older in 2018, Required Minimum Distributions from your IRA (and in some cases from your 401(k)) have to be completed by 12/31/18 to avoid a 50% penalty! Yikes!
Maximizing 401(k)’s:
The maximum you can contribute to a 401(k) in 2018 is $18,500 for those under 50 and $24,500 for those over 50. You have until year end to make up any shortfall!
Roth Conversions:
Maybe you find yourself in a low tax bracket this year and it makes sense to covert some IRA money into a Roth IRA. If so, then it needs to be done by 12/31/18. Check with your CERTIFIED FINANCIAL PLANNER™ professional and your CPA to see if this move is right for you.
Gifting:
The annual gifting limit for 2018 is $15,000. This is the amount that you can gift to each individual without having to complete a “gift” tax return. It has typically been used as a way to transfer wealth to others during life to reduce estate tax upon death and not have to do the paperwork. Although, at present, your estate would have to exceed $11,200,000 for a single person and $22,400,000 for a couple for estate tax to be applied. In any case…the gift needs to be made before year end.
Tax-Loss Harvesting:
Speak to your CFP® professional and your CPA regarding any opportunities for capital-loss-harvesting or in some cases, capital-gain-harvesting, that can be taken advantage of before year end.
Flexible Spending Accounts:
If you don’t have an H.S.A., but rather a Flexible Spending Account, then be sure to use up the balances before year end.
Adjusting Your 401(k) for the First Payroll in January:
Salary deferral limits are increasing by $500 in 2019, so you will be allowed to put in as much as $19,000 for individuals under 50 and $25,000 for those over 50. Be sure to let your HR department know if you need to make an adjustment.
ABOUT THE AUTHOR
Portia L. White is a CERTIFIED FINANCIAL PLANNER™ Practitioner, Vice President and a Senior Advisor at Whelan Financial. With over a decade of experience, Portia continues to push the envelope in her field, extensively studying Social Security and Medicare planning.
Follow her on LinkedIn @PortiaWhite
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