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2023 Year End Planning – Yes, During Summer!

Since we're in the last half of the year, we want to remind you of some year-end items that you may want to review. The following text was originally sent to clients of Alan Holman, our co-host broadcasting out of Denver, CO:
  • YEAR-END TAX LOSS SELLING – If your taxable accounts (IRA’s and Roth IRA’s can be ignored for this) are solely with me, I will take care of this (we can discuss if you would like). IF YOU REMIND YOUR CPA THAT WE HAVE DONE THIS IN THE PAST ALSO, IT WILL HELP WITH ANY GAINS YOU HAVE TAKEN THIS YEAR OR LAST!!! If you have other individual or joint accounts with other advisors, make sure to discuss this with them or me. The concept is to sell any stocks with losses and realize them prior to year-end. FOR EXAMPLE: If a stock was bought at 10 and goes down to 8 you have a 20% loss. You can hold it until it goes back to 10 and there is no benefit or consequence. If you sell at 8 and capture the 20% loss and buy back something similar that in return goes up, you have captured your loss and booked a tax benefit.

  • REQUIRED MINIMUM DISTRIBUTIONS (RMD’s) – If your IRA’s are with me and you have an inherited IRA or are over 70.5 (prior to 7.1.2019) or age 72 now, I will take care of this for you. The new law on RMD’s applies to those whose 70th birthday is July 1, 2019 or later. For those individuals, the first RMD moved from age 70 1/2 to age 72. For those who turned 70 1/2 before July 1, 2019, the first RMD remains at age 70 1/2. If you have other individual or joint accounts with other advisors, make sure to discuss this with them or me.

  • CHARITABLE CONTRIBUTIONS – If you are giving to a church or other charity, you should consider giving appreciated stock. This will allow you to avoid paying the capital gains tax! For example: If you bought a stock at 10 and it is now 15 you would owe capital gains or ordinary income taxes on a 50% gain. If you donate this and then take the cash you would have given the charity and buy back the stock at 15 you have avoided all gains and reset your cost basis. You still get the same tax write off as cash. If you want the tax write off but don’t know who to give it to by year end, you can open a “donor advised fund” and contribute to that. You can then distribute the funds at your convenience and can also invest it and grow it to give more later.

  • MAX OUT YOUR 401K – If you have a work sponsored retirement plan and you haven’t maxed out the contribution, try to do so. The limit this year is 20,500 and if you are turning 50 in the year you can do an additional 6,500 totaling 27,000. For planning these contribution amounts will increase in 2023 to 22,500 and a 7,500 catch up if you are over age 50. If you cannot reach these maximums at least try to max out your contributions that get matched by your company.

  • 529 CONTRIBUTIONS – If you have a child, grandchild or relative that is facing college expenses you can contribute to their 529 plan and get a Colorado state tax deduction. If you live in a another state check their rules first or call me.

  • EMPLOYER SPONSORED FLEXIBLE SPENDING ACCOUNTS – If you have one of these through an employer, make sure you use your money prior to year-end or you lose it. You can use them for a multitude of things!

  • HEALTH SAVINGS ACCOUNT (HSA) – If you have an HSA through work or individually that goes with a high deductible insurance policy try to max out the contribution. Unlike the flex account you can roll this over year to year and if you never use it you can invest it for retirement! The max for 2022 is 3,650 for an individual or 7,300 for a family. For planning purposes, the limits increase in 2023 to 3,850 for individuals and 7,750 for families.

  • IRA CONTRIBUTIONS – You have till tax filing deadline on April 15th of 2023 to make this contribution to an IRA or Roth IRA. Limits for 2023 are 6,000 and 1,000 catchup if you are 50 or older.

  • SMALL BUSINESS RETIREMENT PLAN – If you have started a small biz, consider the options available to defer your income from taxes! There are MANY plans that can allow you to put away SIGNIFICANTLY MORE than an IRA or Roth IRA. Call me!

  • ROTH IRA CONVERSION – Consider converting all or part of your IRA to a Roth IRA if you have a lower income this year! This especially works well for those who are younger and not approaching retirement in the next 5 or 10 years.

Other things that are less urgent but that you should consider:

  • Prepay real estate taxes

  • Prepay home business expenses if you are working from home

  • Update your financial plan or start one

  • Review your estate plan! Make sure your plan is in place and updated

  • Review your risk tolerance and portfolio diversification

  • Check to see if you have listed beneficiaries on all your accounts and that they are correct

  • Review your property and casualty policies

  • Call me to do a life insurance review to make sure you have the correct amount and type of policy you need! This is often filed and forgot and policies expire or don’t meet the needs of the individuals as their age and goals change

  • Check your credit report


Have questions? Use the "Ask the Experts" feature on our home page to get in contact with one of our team members!

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