2020 has certainly been a year of unexpected changes and challenges. While we know everyone is eager to flip their calendar and start a new year, we wanted to send you a list of things to think about as we near year-end:
CARES Act and RMDs
As a reminder, taking a Required Minimum Distribution is not required for 2020 due to the CARES Act that was passed earlier this year. However, that doesn’t mean that you can’t take a distribution from your IRA, especially if you rely on the money for living expenses. It may also make sense to take a distribution if you know your tax bracket will be higher in the future. Everyone over the age of 72 should have already discussed this with us but if you haven’t, please feel free to give us a call to discuss your options.
Gifts and Charitable Donations
Are you thinking about making additional gifts to family or charitable donations in 2020?
If so, please let us know as soon as possible. Once we have the paperwork in hand, transfers are typically completed within two to three business days. Given the high volume of gifts around the holidays, we need to have the paperwork by December 21st at the latest to ensure that the transfers happen before the end of the year. If you are over the age of 72, you should also consider ways to make charitable donations directly from your retirement accounts.
Capital Gains and Tax-Loss Harvesting
Do you have large gains or losses outside of your accounts with Carroll Financial?
If not, there is nothing you need to do. If you do, please let us know as this might be a good time to take some additional gains or perhaps harvest some losses.
Tax Loss Carryforwards
Have you let us know about any tax loss carryforwards?
If not, please let us know so we can note them and take these into consideration when we review your accounts.
How is your money working for you?
Your 2020 budget may have looked very different as compared to most normal years. Many of our clients have realized this year the difference between the budget they need to live on and the budget they want to live on. It’s important to distinguish between these two to ensure that you have flexibility in your budget if and when you need it for unexpected circumstances. The end of the year is a great time to review your spending and create a budget for the upcoming year. Oftentimes reviewing your spending can bring to light ways to save. It’s also helpful to review your withdrawal rate with your advisor to make sure it is in line with your long-term goals.
Have you reviewed your beneficiary designations this year?
Make sure your current designations are still in line with your estate plan and give us a call if we can help you make any related changes.
We have had several conversations about Roth conversions this year. It’s important to remember that the real opportunity to convert to a Roth happens when you have little to no taxable income. December 31st is the deadline to complete a Roth conversion so let us know if you would like to discuss whether or not this makes sense for your situation.
Medicare Open Enrollment
Do you need to enroll in Medicare?
The 2021 Open Enrollment Period runs from Thursday, October 15th to Monday, December 7th, 2020.
Bottom Line: If you have questions or would like to talk about any of the items above, give us a call. We’re here and happy to help as you prepare for the end of 2020.Estate Planning, Retirement Income, Saving, Tax Planning