Year-End Checklist
It’s hard to believe that 2024 is almost over. Year-end provides a great opportunity to review financial planning objectives and tax strategies. To help with this review, we’ve developed a list of year-end planning information that you will find below. We hope that this helps serve as a guide on some of the concerns that you may be having at this time.
1. Review Retirement Contributions
· IRA Contribution Limit: The 2024 contribution limit is $7,000 ($8,000 if you are 50 or older).
· IRA Contribution Deadline: The 2024 deadline for IRA contributions is April 15th, 2025 (or when you file your taxes).
2. Review Employee Benefits
· 401(k) Contribution Limit: The 2024 employee contribution limit for 401(k), 403(b), and 457(b) plans is $23,000 ($30,500 if you are 50 or older).
· 401(k) Contribution Deadline: All employee contributions to an employer-sponsored plan must be made by no later than December 31st, 2024.
· Health Savings Account (HSA) Contribution Limit: The 2024 contribution is $4,150 for self-coverage and $8,300 for family coverage ($5,150 and $9,300 if you are 55 or older).
· Health Savings Account (HSA) Deadline: The 2024 deadline for HSA distributions is April 15th, 2025 (or when you file your taxes).
3. Required Minimum Distributions (RMDs)
Required Minimum Distributions apply to pre-tax retirement accounts and inherited retirement accounts.
· RMD Age Requirement: After the passage of the Secure Act 2.0 in 2022, you must begin taking RMDs annually out of the above-mentioned accounts starting at age 73.
· RMD Deadline: The deadline to take your RMD is the end of the year, except the year you turn 73, you have until April 1st of the following year.
· Failure to take an RMD triggers a penalty on the amount due, typically 25% of the amount not taken on time.
· For those of you who have inherited an IRA, there are separate RMD rules. We would be happy to help you navigate through these rules.
4. Review Options for Charitable Giving
Two popular strategies used to donate to charity are Qualified Charitable Distributions (QCDs) and Donor Advised Funds (DAFs). Both allow you to engage in philanthropy, while simultaneously receiving tax benefits.
· Qualified Charitable Distributions: QCDs allow you to make donations to non-profit organizations directly from your IRA. These donations are not taxable and can help satisfy all or a portion of your required minimum distribution (RMD) requirements in your IRA.
· While your RMD does not begin until age 73, you are eligible for QCDs when you turn 701/2.
· Donor Advised Funds: A DAF is an investment vehicle used for making future donations to non-profit organizations.
· Opening a DAF allows investors who are charitably inclined to donate larger gifts to the account and receive a tax deduction in the year they contribute (sometimes referred to as “bunching”).
· The account is typically invested in the stock or bond market, which provides an opportunity for the fund to grow tax free.
· The DAF can then be used in future years to make donations to various charities and non-profit organizations.
5. Review Investment Strategy
· Asset Allocation: Review your investment allocation to make sure that your portfolio holdings are still aligned with your financial goals and risk tolerance.
· Rebalancing: As your investments fluctuate in value, your portfolio risk tends to shift overtime. Rebalancing your portfolio involves trading your investment positions back to their original allocation and risk targets.
· Tax-Loss Harvesting: If you currently hold a non-retirement account, tax-loss harvesting is one way that you can help ease your expected tax burden this year. This strategy involves selling investments at a loss to reduce potential tax consequences from realized capital gains.
6. Estate Planning
· Update Beneficiaries: Review your investment accounts and insurance policies to confirm the listed beneficiaries. If beneficiaries need to be changed, contact Porter and Guide and we can help to make those updates.
· Review Estate Documents: Wills, Power of Attorney documents, Healthcare Directives, Trust documents – all these estate planning documents should be reviewed regularly to ensure they are up to date and any necessary changes to beneficiaries or executor/trustee have been made.
· Gift Tax: The annual gift tax exemption for 2024 is $18,000 for individuals and $36,000 for married couples. This can be a helpful way to begin transferring wealth to your loved ones tax-free.
Conclusion
Our team of advisors at Porter and Guide Wealth Management is here to help. If you have any additional questions or concerns related to the topics mentioned above, please do not hesitate to reach out. We’re happy to speak with you!