Year-End Financial Planning Checklist and Moves to Stay on Track

Damian Winther, CFP® CSRIC®
Dec 1, 2022 7:15:00 AM

2022 Year End FInancial Planning

With year-end quickly approaching, we encourage our clients to take advantage of key financial planning moves to stay on track. Whether you are a retiree, a young earner, or at the midway point of your career, consider whether you should address some of these money moves before December 31.

Tax Loss Harvesting Before the New Year

Suppose you have a non-qualified brokerage account with securities trading in an unrealized loss position. In that case, you may benefit from this strategy by selling some of your securities at a loss and immediately reinvesting the money into a similar asset. Capital losses can be used to offset capital gains, and the unused losses will carry forward into future years. In addition, taxpayers can use up to $3,000 per year of capital losses to offset ordinary taxable income.

Roth Conversion

If your income this year is lower than initially anticipated, consider shifting assets from your IRA into a Roth IRA. We encourage our clients to use today’s low tax brackets, and Roth conversion can be an excellent way to do so. An added benefit of Roth conversion is that you would do it during a year when the market is down, meaning the future growth on assets in the Roth IRA would be tax-free.

Max Fund Your Workplace Retirement Plan

Take a look at your paystub and make sure you are maxing out your workplace retirement plan (i.e., 401k, Roth/401k and 403b). The maximum contribution in 2022 is $20,500 (or $27,000 for those over age 50).

Purchase Series I Savings Bonds

Series I Saving bonds are issued by the United States Treasury, and taxpayers can purchase in increments up to a maximum of $10,000 per calendar year. For savings bonds issued from November 1, 2022, to April 30, 2023, the interest rate is 6.89%.

Contribute to a 529 College Savings Plan

If you have kids or grandkids, consider funding their 529 plan. Some states offer generous tax benefits on contributions, so it is important to know the specific details and requirements before funding.

Family Gifting

If you’ve been considering gifting money to a family member, remember to keep in mind the annual $16,000 annual gift exclusion. If you’re married, you can do a split gift with your spouse, whereby you can each make a $16,000 gift without having to file a Federal Gift Tax Return.

At Birchwood Financial Partners, we work with our clients to help them feel empowered and knowledgeable about the financial decisions they are making every day. Learn more about our firm, our team, our processes and services, and the clients we currently serve.

Investment Advisory services offered through Birchwood Financial Partners, Inc. an SEC Registered Investment Advisor.

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