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Year-End Financial Planning

It’s the end of the year again and we’re busy reviewing and finalizing tax planning, estate planning, retirement plan contributions, and required minimum distributions (RMDs). If you have questions about your year-end planning, please reach out to your advisor.

Since 2019 represents only the second tax year since the implementation of the Tax Cut & Jobs Act (TCJA), a recap of some of its main features: a near doubling of the standard deduction, the elimination of personal exemptions, a $10,000 cap on real estate and state and local tax deduction (SALT), the elimination of miscellaneous itemized deductions, a more than doubling of the estate tax exemption, and business and corporate tax rate changes.

Gains & Losses Reports

Each year we send investment gains and losses reports to many of our clients’ accountants to assist with tax filings. If you haven’t yet authorized TGS communication with your accountant and you’d like him or her to receive your report or to review your tax planning with your advisor, please call the office and we’ll get you set up.

Required Minimum Distributions (RMDs)

Each year we assist our RMD-obliged clients (those who are 70½ and older or who have inherited IRAs) in taking their required distributions. In November and December, we’re reaching out to clients whose RMDs have not yet been met.

Qualified charitable distributions (QCDs) are a very efficient way to give and have become much more popular since the standard deduction was doubled in the new tax law. QCDs allow those who are 70½ or older to exclude up to $100,000 from gross income for donations paid directly to a qualified charity from an IRA. These donations can be used to satisfy IRA RMDs, but the QCD check must be cashed by the receiving charity before December 31 for it to count as a QCD this year.

Other Gifting

If you’re not eligible to make a QCD, but plan on making a contribution to a qualified charity, college or other not-for-profit organization, consider donating appreciated stock that you’ve held for more than a year rather than cash. This may allow you to deduct the gift and avoid paying tax on the appreciation.

A Donor Advised Fund (DAF) may allow you to take a tax deduction for contributions in the current tax year, even if you don’t distribute money to charities from the fund until future years. DAFs are easy to use and can be particularly powerful if you’re in a much higher tax bracket in the current year than in future years.

Retirement Plan Contributions

Your savings rate is arguably the most important indicator of your financial success, and there is usually no better place to save than in tax-deferred, qualified retirement plans.

The 2019 limit on contributions to IRAs is $6,000 with a $1,000 catch-up for those 50 years old and over. These limits will remain unchanged in 2020. The deadline for making 2019 contributions to Traditional or Roth IRAs is April 15, 2020. Be sure to review your IRA contribution strategy with your accountant and financial advisor, especially if your contributions are non-deductible.

The 2019 employee contribution limits for 401(k)s, 403(b)s, most 457 and TSP plans are $19,000 for those 49 and younger, and $25,000 for those 50 and older (assuming the plan allows it and income restrictions don’t apply). In 2020, these limits rise to $19,500 and $26,000 respectively. Most of these plans have year-end contribution deadlines, but be sure to review the particular rules of your plan as well as additional IRS limits that may apply.

Roth Conversions

To convert or not to convert from a Traditional to a Roth IRA is a decision that must be made on a case-by-case basis. Our Roth conversion analysis takes several factors into account, including your current and future tax brackets, projected retirement age, IRA balances, and the method by which you’ll pay conversion taxes.

Health Care

The 2020 Medicare open enrollment period runs through December 7, and Medicare rules have many nuances. If you are on Medicare or nearing Medicare age, it makes sense to speak with a Medicare specialist to make sure you’re set to receive the best coverage for your unique situation. If you need a recommendation, give us a call and we’ll put you in touch with someone we’ve worked with in the past.

Health Savings Accounts (HSAs) are a popular tool for tax savings that can be used in conjunction with high-deductible health plans. If you have the cash flow to fund an HSA, it can basically function as another IRA in your portfolio and might also serve to bridge potential healthcare-costs gaps between retirement and Medicare enrollment. HSAs can provide a triple tax advantage via pre-tax contributions, tax-free interest and investment earnings, and tax-free payments for qualified medical expenses, including long-term care.

The 2019 HSA contribution limits are $3,500 for individuals and $7,000 for individuals with families. These limits will increase to $3,550 and $7,100 in 2020.

Talk to Your Advisor

If you’d like to know more about these topics, please reach out to your advisor as soon as possible. Time is growing quite short in 2019!


By Joan M. Hill / Communications Coordinator

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by TGS Financial Advisors), or any non-investment related content, made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this article serves as the receipt of, or as a substitute for, personalized investment advice from TGS Financial Advisors. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. TGS Financial Advisors is neither a law firm nor a certified public accounting firm and no portion of this article’s content should be construed as legal or accounting advice. A copy of the TGS Financial Advisors’ current written disclosure statement discussing our advisory services and fees is available upon request.

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