It may seem as if the end of the year is very far away and that there is no need to start making end of the year financial plans as of yet. However, the reality is that the end of the year, and the activities which surround it are busy. At times, with all the festivities going on, it becomes close to impossible to do anything sensible where financial planning is concerned. You should consider starting your end of year plans now because early plan may spare you the heavy fines. Here are a few things that you should consider doing right now.
If It’s Time, Get Your RMD
You probably know that you are supposed to start making withdrawals from your IRA or other retirement plans when you reach the age of 70 and a half. If you don’t take your RMD on time, you may be forced to pay a 50 percent excise tax on the amount which you will have failed to distribute. This is another reason why working with a Financial Advisor can help you avoid penalty’s and anxiety.
Making A Charitable Contribution
Did you know that if you make a charitable contribution using a Qualified Charitable Distribution, you will get a tax exemption of the amount and the amount donated could also qualify as RMD? If you have not made any donation this year, perhaps now is the right time to make a meaningful contribution from your IRA. Again, seek professional guidance on this strategy.
Other Tax Mitigating Strategies
This is the perfect time to look into all your accounts and see whether there are tax gains which you can still capitalize on this year. If you do not understand how having investments such as mutual funds could affect your taxes and distribution, talk to a financial expert and have everything straightened out before the year ends and you are left with massive losses in your hands.
Avoid Tax Deferral
Don’t Delay! When the year is coming to an end, some postpone all their tax related items until a later date. Tax deferral may seem like a quick fix to grow your money, but it is important to note that it puts off your taxes as opposed to getting a permanent resolution to the problem. If you are employed, it may be wise to fund your employer sponsored plan as much as possible to get the full match of the company. After all, free money is indeed the best kind that there is, right?
Yes, all of this takes knowledge and effort but can pay off with the proper plan. We are here to help you plan for everything that comes with a successful retirement. Start early, plan ahead and you will have the best shot at a confident retirement.