Year-End Tax-Planning Opportunities

Josh Rennie, CFP®, AIF®

Nov 8, 2021

It’s hard to believe that the year is already beginning to wind down. This is a busy time filled with family and friends, holidays, travel, parties, and other joyful activities. This is also an opportune time to do some tax planning before the new year. Here are some strategies to consider – to make 2022 your most tax efficient year yet.

Roth Conversions

A Roth conversion, moving funds from a Traditional IRA to a Roth IRA, is a common and effective planning technique for almost all taxpayers. This process converts an amount of tax deferred dollars from your Traditional IRA into your Roth IRA. This is an appealing route because Roth IRAs offer enhanced flexibility due to their tax-free distribution in the future.

Qualified Charitable Distributions

Giving to charity is a step towards living a purpose-filled life. If you have reached the required IRA distribution age, you can make donations up to $100,000 directly from your IRA to most nonprofits. This contribution then satisfies your annual required minimum distribution and is a Qualified Charitable Distribution. No taxable income is generated because the money goes from a pre-tax account directly to a nonprofit.

Rebalancing Your Portfolio

With the significant rally in stock prices off the 2020 pandemic lows this might be a good time to rebalance your portfolio if you haven’t already done so. If you rebalanced in 2020 near the stock market lows, you are likely to be over-weighted in equities now. If you took advantage of tax-loss harvesting, in 2020, a tax strategy where you sell an investment at a loss to offset gains you’ve realized or may realize in the future, you may be able to rebalance with little tax consequences.

If you are a TCI client, rebalancing is already a part of our investment management process and typically performed when allocations shift to a certain point, as opposed to rebalancing on a calendar basis, so that we can get invested assets back on target when it makes sense to do so.

Review Beneficiary Designations

While not necessarily a tax strategy, annually revisiting your beneficiary designations is a great housekeeping item. This quick review should include your will, medical directives, retirement accounts and insurance policies to name a few.

These strategies are only the tip of the proverbial tax efficiency iceberg. One of the benefits of working with a financial planner is that we’re always on the lookout for ways to maximize your returns while reducing your tax bill. So, take advantage of some of these opportunities before the year’s end. Tax time will be here before we know it and at that time your tax efficiency options will be limited.


To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her/their individual situation, he/she/they is/are encouraged to consult with the professional advisor of his/her choosing. TCI is neither a law firm nor a certified public accounting firm and no portion of this content should be construed as legal or accounting advice.

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