Don’t leave money on the table!
An easy starting point is to review employer sponsored plans, such as a 401(k). If you are not on track to contribute the maximum $18,000 (or $24,000 if you’re age 50 or over), there may still be time to bump up your salary deferral. Consider how much you can save and push yourself to make an increase. This is also a good time to review if you are taking advantage of any matching contribution that may be offered. Don’t leave money on the table!
Give the Gift
Gift Exclusion & Education
The gift tax exclusion for 2016 is $14,000 per gift recipient, while married couples may give a total of $28,000 to any number of people tax-free within a calendar year. There is an exclusion for medical bills and school tuition since you can pay these expenses directly for others without being taxed. Be careful though, the education exclusion does not extend to books, fees, and living expenses.
You can also deduct up to $5,000 in 529 contributions for a single return, and $10,000 for a joint return, from New York state income tax if they are deposited before December 31st.
Mind Your RMDs
Required Minimum Distribution (RMD)
For folks over age 70.5, you are required to take a minimum distribution from retirement accounts, such as an IRA or 401k, before December 31st. The penalty for any amount not taken is steep – 50% tax on the amount not withdrawn on top of the income taxes that are still due. This also includes clients (regardless of age) who may be the beneficiaries of Inherited IRAs. It is important to partner with an Advisor for guidance, as not all investment custodians remind clients about these RMDs. If you are not sure if your RMD has been completed for this year, now is the time to check.
You have the option to donate any amount of your RMD proceeds to a charity for 2016 and excluding the donated amount from your taxable income for the year. This option is available only for those who are over age 70.5, so it excludes younger beneficiaries of Inherited IRAs. It is not available for donor-advised funds and you would not be able to claim the donated amount as a charitable tax deduction. No double dipping!
Score a Win-Win
If you make year-end donations to charity, consider making the donations with shares of appreciated securities. Not only will you get the full credit for the market value of the donated investment, but you will also avoid paying capital gains taxes. It’s a great time to consider this tax-planning strategy given that the stock market is trading at all times highs.
It's Open Season
Flex Spending Accounts (FSA)
If you have an FSA through your employer, you may need to spend those dollars by year-end or you lose them. It may also be open enrollment time for your benefits. Be sure to check with your Human Resources team to make sure you understand your specific benefit options.
Elevate Your Trajectory
Don't wait another day to build a successful, secure future with Strategic.
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets of over $1.8 billion.Overview
Strategic Financial Services, Inc. is a SEC-registered investment advisor. The term “registered” does not imply a certain level of skill or training. “Registered” means the company has filed the necessary documentation to maintain registration as an investment advisor with the Securities and Exchange Commission.
The information contained on this site is for informational purposes and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Every client situation is different. Strategic manages customized portfolios that seek to properly reflect the particular risk and return objectives of each individual client. The discussion of any investments is for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments identified and described do not represent all of the investments purchased or sold for client accounts. Any representative investments discussed were selected based on a number of factors including recent company news or earnings release. The reader should not assume that an investment identified was or will be profitable. All investments contain risk and may lose value. There is no assurance that any investments identified will remain in client accounts at the time you receive this document.
Some of the material presented is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Strategic Financial Services believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
No content on this website is intended to provide tax or legal advice. You are advised to seek advice on these matters from separately retained professionals.
All index returns, unless otherwise noted, are presented as price returns and have been obtained from Bloomberg. Indices are unmanaged and cannot be purchased directly by investors.