Broker Check

Time to Think About Year-End Financial Strategies

October 03, 2023

As we roll into fall and the fourth quarter, it’s a good time to pause and reflect on proactive ways to set up your finances for 2024.

Economically speaking, we are in a much different position than last year. Economic growth has been strong, and inflation appears to be trending lower. However, regardless of current and future financial conditions, there are several actions you may want to take a look at before we close out 2023.

Year-End Tax Considerations

Year-end is a good time to look at your tax situation and assess your current and future tax liabilities. Keep in mind that the ideas below are for informational purposes only and are not a replacement for real-life advice. Make sure to consult with your tax, legal, and accounting professionals before making any year-end tax moves.

  • Tax Loss Harvesting: Evaluate whether offsetting any losses from 2022 with gains from 2023 would make sense. Losses don’t expire, so there’s no rush in taking them.

  • Roth IRA Conversion: By rolling your retirement plan into a Roth individual retirement account (IRA), you pay taxes upfront but may not be taxed when you take withdrawals later in life.1 For the tax-free and penalty-free withdrawal of earnings, a Roth IRA must meet a 5-year holding rule and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain circumstances, such as the owner’s death. The original Roth IRA owner is not required to take minimum withdrawals.

  • Charitable Donations: Not all charitable donations must come from your checking account. Consider donating real estate, cars, and other items of notable value.

  • “Green” Deductions: If you’ve made energy-efficient home improvements or purchased an electric vehicle, you could be eligible for certain tax credits.2

Health Flexible Spending Account (FSA)

  • If you have an FSA, remember to utilize it before the year-end, adhering to the “use it or lose it” rule. If you do not plan to see your doctor or dentist again, there are some products that may count toward your FSA. Sunscreen, baby bottles, contact solutions, hearing aids, and glasses are just a few that qualify.HSA/FSAs are not offered through LFA.

Required Minimum Distributions (RMDs)

  • If you must take an RMD from a retirement account (or from one you inherited) but don’t need the money to cover living expenses, use year-end planning conversations to decide what to do with the assets. Remember, the SECURE and SECURE 2.0 laws enacted over the past several years have changed some rules surrounding RMDs, including when they must begin and the treatment of inherited qualified assets.

As financial professionals, we want to help our clients be positioned well for the coming year. If you have any questions about year-end strategies or anything we covered, please do not hesitate to contact us.

1., January 27, 2023
2., June 16, 2023
3., October 18, 2022

This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm.