Five financial items you should consider before December 31st

December will be here by the end of the week, and it might be a good idea to get a jump on these year-end financial tasks you might want to consider. Here’s a quick list of items that Lockheed Martin employees might want to talk over with a financial planner and tax professional.

Review your portfolio’s capital gains exposure

We’ve seen some pretty solid market gains the last few years, but maybe you have a few individual stocks that have not done so well in 2018 with the recent pullback. It might be a good time to look at selling those before the end of the year to realize a tax loss. It might allow you to realize some of those gains as well, or give you a decent write-off on your taxes. Work with your tax professional and financial advisor to develop a plan.

Review your retirement plan contributions

The IRS announced recently that it is increasing the annual contribution limits for 2019. The maximum contribution you can make to your 401k will go from $18,500 to $19,000 next year. If you’re over 50 years old, you’ll also be able to add $6,000 additionally as a catch-up contribution. The limits you can contribute to IRAs and Roth IRAs are also going from $5,500 a year to $6,000.

Want to add more than the $19,000 into your 401k? You might also look at contributing after-tax dollars to your plan. I’ll cover this more in a future article and link here when it posts.

Consider Roth conversions

It might be a good time to convert your traditional IRA to a Roth IRA. There are a lot benefits to the Roth IRA, including tax-free income in retirement. If you have traditional IRA assets, you can choose to pay some of those taxes in 2018 and convert those dollars over to a Roth IRA. Work with your tax professional on this as well to see if it’s a good fit.

Make sure you’ve satisfied your RMD

This is important if you’re over the age of 70 ½ or have an inherited retirement account (sometimes called a beneficiary IRA). The IRS makes you take out a certain amount of money from your retirement accounts (except for your Roth IRA accounts, which are exempt) each year after reaching 70 ½. If you don’t, they can penalize you for not taking the withdrawals. Make sure your CPA and financial advisor is aware.

Finish up those charitable giving goals

If you aimed at setting aside a certain amount to your favorite charity, finish it out by December 31st so it will count for the 2018 tax year. Have items around the house to donate to Goodwill or other charities? Get those in before the end of the year as well.

Deadlines to watch for early in 2019

• February 1st – 1099 and 1099-R forms start to mail.
• Monday, April 15th – IRS tax filing or extension deadline. You’ll also want to make sure to make any IRA contributions for the 2018 tax year by this time as well.

Most importantly, get help. This time a year is a great time to sit down and review your plan with your tax professional before tax season gets them slammed with stacks of paperwork. A financial advisor can work with your CPA as well to make sure you have a plan in place for 2019.

Need help with your year-end strategy? I’d love to help. You can email me at Brian@TheAeroAdvisor.com or fill out the quick and easy form below and I’ll get back to you.