Equipping you to be an informed investor

With a couple of weeks remaining, there is still time to consider some year end planning strategies.

• Managing Income/Expenses: Consider your likely taxable income for this year and next to determine whether it makes sense to accelerate the realization of income or deductions in the coming days.
• Annual Gifting/529 Plan Contributions: Every individual can use the annual gift-tax exclusion to gift up to $15,000 per year to any person (e.g. a married couple can gift $30,000 to each child, every year, with no gift/estate tax implications). These gifts can be made in a number of ways including as direct gifts, gifts to trusts, and contributions to 529 plans (a certain amount of which may be deductible for state income tax purposes).  To the extent you can afford to do so, taking advantage of this exclusion prior to the end of the year can have significant long-term benefits.
• 401(k) Contributions: If you are eligible to contribute to 401(k) or similar retirement plans, determine whether you have contributed the maximum allowable (or affordable) amount for the year ($19,500 for those under 50 years old and $26,000 for those older than 50)…and don’t forget to adjust your contribution rate for the coming year as the IRS has increased contribution limits by $1,000.
• Delaying Pre-funding Future Charitable Contributions to Donor Advised Fund: Although it may be unlikely that individual tax rates increase in 2022 (a mid-term election year), it remains possible that this will happen. As such, it may be wise for high income families to delay making sizable charitable donations, including pre-funding future years’ contributions to a Donor Advised Funds (or similar vehicle), until 2022. Whenever possible, gifting appreciated securities and/or making Qualified Charitable Distributions from an IRA, are tax efficient ways to manage your charitable giving.