Welcome to the final months of 2024! Before we close this year, let’s make sure we optimize your finances with the following checklist. Please, contact your advisor for specific guidance.
1 | Max Out Retirement Accounts
Don’t forget to put as much as you can (up to $23,000 or $30,500 if age 50 or older) into your 401(k) plan before year end. If you plan to fund an IRA or Roth IRA (up to $7,000 or $8,000 if age 50 or older), you have until April 15th, 2025, to make contributions for 2024.
2 | Required Minimum Distributions (RMD)
If you turn age 73 or older in 2024 and have assets in a qualified account, you may be subject to RMD’s. Be sure to distribute the appropriate amount before year end. Remember, inherited IRA’s may also be subject to RMD’s, so please consult with your financial advisor to be sure all RMD’s are taken accordingly.
3 | Qualified Charitable Distribution (QCD)
If you are subject to RMDs and anticipate giving to a charity in 2024, consider a Qualified Charitable Distribution. A QCD is a donation from your IRA directly to the charity of your choosing. If you qualify for a QCD (over the age of 70 ½ with an IRA), consider this strategy vs. paying the charity directly, it may save you a significant amount in tax. PLEASE NOTE: be sure to process your QCD’s prior to distributing your RMD to ensure you receive the tax benefit.
4 | Roth Conversions
If you are retired (or have a low income) and are below RMD age, you may benefit from a Roth Conversion. If you have a funded IRA, this strategy moves funds from a Traditional IRA to a Roth IRA. This transfer is taxable, with the idea that we intentionally pay a lower tax rate “now” for the benefit of tax-free growth moving forward. It also will lower your future RMD amount.
5 | Tax Loss Harvesting
If you have a taxable capital gain in 2024, you may consider selling a position at a capital loss to offset the gain. However, this example only works if the asset you are selling should be sold! The strategy is to accelerate the loss before year-end to offset the capital gain that occurred in 2024. Our CPS trading team is actively monitoring this strategy for our clients.
6 | Gifting/Donation
Gift | If you plan to give money to an individual (not a charity) up to the $18,000 gift tax exclusion, remember to do so before the end of the year.
Donation | Keep your receipts for 2024 donations to charity. You may be able to take a deduction if all your itemized deductions added together exceed your standard deduction. Give the receipts to your CPA, and he/she will help determine if it will provide you a tax benefit.
7 | Check your Federal Withholding
Look at your most recent paystub and perform a quick analysis to determine if you are withholding enough. This practice is good to do now, so you can estimate if you will owe on April 15th, 2025 or determine if you should do additional withholding prior to year-end.
8 | Keep Your Holiday Budget in Mind
The holidays are stressful! They are a great time for family gatherings and showering our loved ones with gifts. Please don’t let the hustle and bustle of the season allow you to get trapped with shopping fever. Keep your budget in mind, set aside the amount you are willing to spend this holiday season and stick to that amount. If you need some assistance with your budget, or any other year-end planning, please reach out to your CPS Financial Advisor.
