Time flies by when the holidays arrive which means the New Year will be here before you know it. For investors, that gives you just over a month to take care of a few important year-end planning items.

To make this easy, here is a checklist for you…

  1. Required Minimum Distributions (RMD) – if you turned 70½ this year, you have until April of next year to take your first RMD. But, if you’re older than that, you must take your RMD before December 31.
    • The custodian of your IRA or other tax-deferred plan (not Roth IRAs) should be able to provide you with your RMD amount
    • Remember to allow extra time for operational items, like paperwork and time needed for trades to settle, if applicable
  1. Gifting and Charitable Donations – December 31 deadline
    • Use Charitable Donations to reduce your taxable income when you itemize on your tax returns. Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply
    • For a list of “qualified charities,” visit the IRS website
  1. Tax Loss Harvesting – December 31 deadline
    • Often times, investors can strategically rebalance their portfolios and realize capital losses to offset capital gains realized over the course of the year
    • If your capital losses exceed your capital gains, the amount of the excess loss you can use to offset income is capped at $3,000, ($1,500 if you are married filing separately)
    • If your net capital loss is more than this limit, you can carry the loss forward to later years
  1. IRA Contributions – generally, an April 15, 2016 deadline (unless you file for an extension)
    • For 2015 and 2016, your total contributions for Traditional and Roth IRAs are capped at $5,500 ($6,500 if you’re 50 or older)
    • For 2015, the basic limit for elective deferrals to plans such as 401(k)s or 403(b)s is $18,000 ($24,000 for people age 50 or older)
    • You can contribute to a Roth IRA even after the age of 70½, though you cannot deduct contributions made to a Roth.
    • The limits for Roth IRAs are the same as Traditional IRAs, but how much you can contribute depends on your Adjusted Gross Income (AGI). To find out how much you can potentially contribute, check the IRS website
  1. Update Your Beneficiaries –no deadline
    • You can update your beneficiaries at any time, but the end of the year presents a good opportunity to double check how your assets will be distributed upon your passing.
    • To note, how you assign beneficiaries generally takes precedent over what is laid out in your will, if the two are different.
  1. Portfolio Rebalancing and Strategy Check-In – no deadline
    • Over the course of any given year, parts of your portfolio will outperform others which adds to or reduces those weightings for your asset allocation. This year, the Energy component of many portfolios was reduced in size materially. If it makes sense, the end of the year is a good time to bring your asset allocation back into line
    • Have your goals or personal financial situation changed this year? Are you going to need more or less income next year? What is your investment outlook for stocks, bonds, and other asset classes? Is your portfolio’s allocation and overall strategy reflective of these factors?

Bottom Line for Retirees

Don’t wait until the last week of the year to check items off this list. It’s better to knock them out now, so you can rest easy over the holidays and not worry about missing tax deadlines or paying penalties. These are relatively easy pitfalls to avoid, so make life easier for yourself.


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