Year-End Planning

Julia M. Carlson |

As we approach the year end (can you believe it?), it is easy to get wrapped up in the busyness of the holiday season, when the last thing on your mind is implementing some tax strategies. As the election results are finalized, here are some things to consider before the New Year is upon us!

Roth IRA Conversions: IRA owners can consider converting part or all of their traditional IRAs to a Roth IRA. This is never a simple or easy decision. Roth IRA conversions can be helpful, but they can also create immediate tax consequences and can bring additional rules and potential penalties. Remember, once you convert to a Roth IRA, you cannot recharacterize it. It is best to run the numbers and calculate the most appropriate strategy for your situation.

Harvesting Capital Gains and Losses: Looking at your investment portfolio can reveal a number of different tax saving opportunities. Start by reviewing the various sales you have realized so far this year on stocks, bonds and other investments. Then review what’s left and determine whether these investments have an unrealized gain or loss. (“Unrealized” means you still own the investment and haven’t yet sold it, versus “realized,” which means you’ve actually sold the investment.) When reviewing your portfolio, it is critical to know the cost basis of your investments. If you are considering realizing a loss, be aware of the “wash sale” rule, which simply means you can’t repurchase the same security or type of security within 30 days of the sale. Also, if you acted on that stock tip from your brother-in-law, waiting for the stock to go back up to where you started may be a lost cause. Consider selling that worthless investment and use the loss to offset other capital gains.  


We are happy to answer any questions and help you get your financial plan on track for the New Year!  Call us if you would like to review your options. 


Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.

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