While now is not the time to make wholesale changes to your portfolio, consider year-end planning strategies given the unique opportunities and new legislation taking effect this year.
If this list seems overwhelming, start at the top and evaluate each option one at a time. Put a check next to those that might be relevant to your situation and call me to discuss in more detail. Any actionable strategies can create a meaningful impact on your overall financial well- being – little changes can make a big difference over time!
1. Annual Saving Targets
If you're in the asset accumulation phase of life (still working and saving toward financial independence), revisit your financial plan to determine if you've reached your 2020 contribution target. Even the most carefully crafted plan might fail if contribution targets are not met on an annual basis.
2. Income and Tax Management
If you're in the distribution phase of your life (age 72 and beyond), 2020 required minimum distributions (RMDs) from your IRAs are
suspended. That means no forced distribution from your IRA and no added income taxes this year. Evaluate planning opportunities that exist if your taxable income decreases this year.
3. Inherited IRAs
Inherited IRA required minimum distributions (RMDs) are also suspended this year. Are there any planning opportunities that exist if your
taxable income is lower this year?
4. Tax-Loss Harvesting
Review year-to-date realized capital gains and determine if tax-loss harvesting is an option.
5. Roth Conversion
2020 income will likely be lower for many investors with IRAs since Required Minimum Distributions were suspended this year. Now might be time to take advantage of lower taxes and convert part of your IRA to a Roth IRA, especially if you have a non-spouse or non-charity beneficiary. The SECURE Act requires most non-spousal beneficiaries to liquidate an inherited IRA by the end of the 10th year of inheritance, creating the possibility of a significant tax burden.
6. Cash Reserve
Now is the time to consider any short-term cash needs you may have over the next 12-18 months. With the possible proposed changes to capital gains tax treatment and potential for upcoming market volatility, now might be an opportune time to revisit cash flow needs and raise any necessary cash.
7. Risk Management
Have you reviewed your property and casualty insurance policies this year (home, auto and umbrella) to confirm that they are properly
coordinated and in good order? If you live in Michigan, evaluate how auto insurance law reform impacts your policy.
8. Review New Risks
Have you moved? Changed jobs? Experienced a loss? Bought a recreation vehicle?
A life-changing event can trigger a new set of risks. Let's ensure you're appropriately insured in light of any changes to your situation.
9. Mortgage Refinance
It might be time to lock in historically low interest rates. Please contact me to explore your options and how it might impact your cash flow and
overall financial planning goals.
10. SECURE Act, Beneficiary Designations and Estate Planning
Review your estate planning documents and beneficiary designations to confirm they're still aligned with your intentions. Evaluate how the SECURE Act impacts your estate plan and determine if your trust and/or beneficiary designations should be updated.
As always, it's my pleasure to help you achieve peace and prosperity! – Nicole Gopoian Wirick, JD, CFP®
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
© 2020 Prosperity Wealth Strategies
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