While the holidays are a joy for many of us, it’s important not to get too distracted from year-end planning. Now’s the time to talk to your advisor about taking advantage of tax-deferred growth opportunities, tax-advantaged investments, charitable-giving opportunities, and other available strategies.
Courtesy of Garry Kachkovsky:
Before some of our locals take the La Jolla Cove Swim Club New Year’s Day Polar Bear Plunge, set your financial goals for 2018. Below are a few items to consider:
- Discuss year-end planning: Talk to your advisor, CPA, and or attorney to address year-end financial and tax planning.
- Adjust your coverage: Talk to your property and casualty agent about your homeowners’ insurance policy. Many of our homes have substantially increased in value through the years – make sure your insurance coverage reflects this.
- Check cost of living: The Social Security Administration typically announces next year’s cost-of-living adjustment in October. In January of next year benefits will increase 2%. You can also find that information on their useful website – www.ssa.gov. Here is a link to the recent press release – https://www.ssa.gov/news/press/releases/2017/#10-2017- 1.
- Consider retirement: New retirement plan contribution limits come from the IRS. Plan to adjust contributions appropriately and, don’t forget about the catch-up provision if you are over 50. Although in 2018 the IRA and Roth IRA limits remain at $5,500 ($6,500 with catch-up), company sponsored plan limits will increase by $500 in the New Year (i.e. $18,500 and $24,500 with catch-up). The total DC plan increases to $55,000 ($61,000 with catch-up) – a shot in the arm for consultants, self-employed, small business owners, and workers who have the option of filling their retirement stash with after-tax greenbacks.
- Review your portfolio: Many mutual funds make taxable distributions toward the end of the year. You may want to consider balancing your realized capital gains with losses where appropriate. If invested in mutual funds, don’t forget about important capital gains distributions dates that typically fall in mid-December.
- Plan to harvest tax losses: Review and implement year-end tax planning decisions for the upcoming tax season. Consider rebalancing at the same time for tax efficiency.
- Keep calm and consult on: You’re likely to pick up investment tips around the holiday party punchbowl. No matter the source, take the cautious path: Consult your advisor before acting.
- Set financial goals for 2018: Reassess all future financial goals (e.g. College funding for kids or grandkids, saving for your dream home, retirement savings or retirement spending) and work with your advisor to make adjustments, if needed.
- Heed donation deadlines: Remember year-end gift and charitable contributions deadlines. Be sure to allow enough time to complete donations, and keep tax limitations in mind if you plan to give tax-exempt gifts to relatives or friends this year.
No matter what traditions you hold around the holiday season, there is one we can all share: The importance of giving to those less fortunate than ourselves. Charitable giving can be one of the most satisfying aspects of a financial plan – and it may even have a feel-good impact on your year-end tax liability. Some charities, however, devote too many resources to marketing
campaigns and exorbitant overhead, and not enough to the cause. So how do you know if a charity is doing right by your donation?
Forbes.com reports that charitable giving grew 4.9% in 2013, with digital donations making up 6.4% of the overall amount. And with households giving an average of 1.9% of their after-tax income each year, according to an annual report conducted by the Indiana University Lilly Family School of Philanthropy, it can be important to make sure your dollars are used effectively to make a difference.
Before you open your wallet or spend one of your weekends volunteering this holiday season, check out the websites below for a look at the inner workings of your favorite charities:
- Guidestar.org contains records from 1.8 million nonprofits registered with the IRS, with access to each organization’s Form 990, a document that details nonprofits’ income,spending, mission and executive salaries.
- The Better Business Bureau Wise Giving Alliance generates free reviews of more than 1,300 charities every two years. Local BBB websites provide evaluations on an additional 10,000.
- CharityNavigator.org provides ratings (four stars being the highest) on the charities it follows, based on financial health, accountability and transparency. Of the three websites listed here, this is widely recognized as the easiest to navigate and understand.
Of course, the best way to get to know how a charity works is to spend time with it. By volunteering, you will be privy to an insider’s view of the organization’s people, practices and impact – and feel confident that your money and time can truly make a difference. Consider taking the kids with you and creating a family charitable tradition you can pass down through the generations. You may see firsthand the value and effectiveness of your charitable gift at work.
If you have questions regarding financial planning or investment management, give Garry a call at 858-450-9711 or email at email@example.com.
Kachkovsky & Fisher is a Registered Investment Advisory Firm. This information is general in nature, is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Investments and strategies mentioned may not be suitable for all investors. Past performance may not be indicative of future results. Investors should consider the investment objectives, risks, charges and expenses associated with savings plans before investing.
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