December 27, 2019
Year-End Tips on Taxes, Investments, and Planning
To: Clients and friends of Potomac Wealth
Strategies, LLC
From: Gary Partoyan
Please consult a tax professional for advice on
tax-related matters. I am here to guide
you but am not able to give formal tax advice.
Taxes
·
Required
Minimum Distributions "RMD" are due by 12/31/19 from IRAs and
401(k)s and
some
other retirement accounts.
ALL PWS
clients are good to go on this now—THANK YOU for working with me in November
and early-December to get it all done!
·
Ask your tax professional if you are subject to
RMD (usually only if over age 70.5).
·
Pay your estimated taxes if applicable.
·
Set your 2020 tax withholding elections with
your Payroll/HR team at work
·
Harvest gains/losses in taxable investment
accounts, if applicable, by 12/31/19. FEW
clients need to do this; applicable only to taxable accounts.
·
Hire a tax pro to help with these and other
decisions. Contact me if you want
referrals.
Retirement Savings/Contributions
·
401(k)
and similar... contribution limits are $19,500 ($26,000 if age 50+) for 2020,
increased from $19,000/$25,000 for 2019.
·
Make sure you’re on track to contribute maximum
allowed, or maximum you can afford.
·
Make sure you contribute at least minimum
necessary to get maximum “free money” (company matching or profit sharing) from
your employer.
·
Contribution limits apply to all 401(k) plans
combined.
o If
you changed jobs, you new 401(k) may not know how much you contributed to your
old 401(k), so talk to HR/Payroll at new job to try to adjust if necessary.
·
IRA/Roth
IRA... contribution limits are $6000 ($7000 if age 50+) for 2020, same s
2019.
o Ask
your tax pro or me about "Roth Conversion" as a way to reduce taxes
in retirement.
·
SIMPLE IRA contribution limit increased to
$13,500 (from $13,000 in 2019); for age 50+ it’s now $16,500 ($16,000)
·
Retirement savings target should be ~15% of your
salary (gross pay), but please do an Investment Plan with me to be more clear about
your specific situation.
·
If you are a business-owner, let's talk. Great opportunities to save more than typical
"employees" using SEP-IRA and/or Individual 401(k) plans.
529 college savings plans
·
Contributions for this year are due by 12/31 in
most states, but there are some exceptions.
·
Contributions may be deductible, so check with
the 529 Plan and your tax advisor.
o If
you have cash set aside already, try to put it into a 529 before 12/31 so you
can get any possible state income tax deductions.
·
Anyone can contribute to a 529. But do NOT make check payable to the child when
giving a gift. Best to contact the 529
plan for most efficient way to write the check.
·
Ask your tax pro or me, or
click
here, for more about 529 plans.
Employee Benefits
·
Most employers offering healthcare insurance and
other benefits have a schedule for renewing or changing for next year, aka
"open enrollment".
·
Please make sure your benefits are the way you
want for the coming year.
·
Consider child care benefits offered.
·
Consider tax advantages of using a Healthcare
Savings Account (HSA).
·
Contact HR/Benefits for help.
Review Investments
·
Know your risk tolerance profile and asset
allocation targets. I can help you
determine this.
·
Is your portfolio Conservative, Moderate,
Aggressive, or somewhere in-between? Is
that suitable for your risk tolerance?
·
Are the investments high-quality, or do you need
to use better mutual funds or ETFs?
·
Change your portfolios accordingly.
Miscellaneous
·
Flexible Spending Accounts (FSA) and Healthcare
Savings Accounts (HSA) can provide many advantages. Find out if they are available through
employer or otherwise.
·
Save your receipts/confirmations for charitable
contributions, in case they are needed.
·
Beneficiary
Designations on your IRAs, 401(k)s, insurance policies,
annuities, and other retirement plans out-rank what you specify in your
Will and/or Trust, so be sure to synchronize your accounts with your estate
plan.
o Consult
your tax and estate planning advisors if you have complexities such as blended
families and multiple marriages. I can
help you figure out what to ask those pros.
How To Be Financially
Successful
·
My most "successful" clients are on
track to meet their personal goals and prepared for emergencies, regardless of
income or size of nest egg.
o Saving
enough, investing prudently, insured for disability and death.
·
Do an Investment Plan with me—it's worth the
extra time/effort, and it's included in your fee.
·
Schedule a call or meeting for January.
Be well and enjoy the holiday season.
Thank you for your business!
Gary Partoyan
Financial Advisor
