Wealth Management Blog | WrapManager

Year End Financial Review and Planning Checklist

Posted by Doug Hutchinson | CFA®, Director of Research and Trading

December 9, 2021

Year End Financial Review and Planning Checklist

Before the year ends, take some time to review your financial health. Here are 10 financial planning items to review before 2021 comes to a close.

1. Take your Required Minimum Distribution

Required Minimum Distributions (RMDs) were temporarily suspended for 2020 due to COVID-19 relief legislation but RMDs are back for 2021 and beyond.

If your 70th birthday is on or after July 1, 2019, you will have to take an RMD from your retirement account prior to December 31st once you reach age 72 in most situations.1

Note that Roth IRAs do not have RMDs. Consult with your financial advisor to determine the exact amount of the RMD that you need to take before December 31st.

4 Ways the New Tax Law Can Reduce Your 2018 Taxable Income

September 19, 2018

A recent survey from the American Institute of CPAs found that 63% of individuals who either have $250,000 in investable assets and/or $200,000 in household income were likely to tweak 2018 financial planning strategies as a result of the new tax law. Most of the respondents indicated that ‘tweaking’ their financial plans would be in an effort to reduce taxable income, and the 2018 Tax Cut and Jobs Act offers a few new methods to do just that.¹ Here are four: Lump Your Charitable Contributions Together – in the new tax law, the charitable giving deduction has remained in place for taxpayers who itemize. The thing is, however, that many taxpayers are expected to take the standard deduction in 2018 instead of itemizing, since it has jumped to $12,000 for individuals and $24,000 for married couples. One method to get over the standard deduction, however, would be what many CPAs call “bunching,” or making a few years’ worth of charitable donations in a single year. That way, you could itemize your deductions in one year, and perhaps take the standard deduction the next. [+] Read More

The Final Tax Bill – Special Report

December 28, 2017

On December 22, 2017, President Trump signed into law the tax legislation known as the “Tax Bill.” The majority of the tax law’s provisions go into effect in January with just a handful delayed until 2019 or after. The signature provision of the law – and where the biggest tax cut was dealt – fell to corporations, where the tax rate was cut from 35% to 21%. A cut this sizable could have a direct impact on corporate earnings, which could flow-through to stock prices in the near to medium term. [+] Read More

What Will the Final Tax Legislation Look Like?

December 11, 2017

The Senate and the House have passed their own versions of tax reform, but the work of making tax reform law is far from over. From here – and perhaps over the next few weeks – a conference committee of House and Senate Republicans will convene to try and iron out the differences between the two bills. This reconciliation process is no layup, but conference committee proceedings also rarely fail. The bigger question at hand may not be if Republicans can get tax reform done. But rather: can Republicans have a bill on the president’s desk by Christmas? Time will tell. As the debate rolls on in Congress, we thought it’d be a good opportunity to look at some of the key features of the bills – what they have in common, and where the biggest differences lie. [+] Read More

Nuveen Looks Ahead to Future of the Bull Market, Tax Reform in 2018

November 16, 2017

The bull market in equities is aging but remains very much intact... For more than a year now, equity markets have enjoyed an unusual combination of low volatility and near-uninterrupted price gains due to a combination of accelerating economic growth, improving earnings, accommodative monetary policy and still-low inflation. Economic growth should continue to improve, but expectations have risen, which means positive surprises will be harder to come by. At the same time, central bank policy is slowly tightening, which could contribute to market volatility. Additionally, accelerating growth and tighter policy may finally trigger an uptick in inflation, especially in wage inflation given the low level of unemployment. Should this occur, we expect bond yields will climb, which could jolt other financial assets including equity markets. We don’t expect yields to rise unimpeded, but an ascending period of peaks and troughs looks likely. Read an excerpt of the complete commentary below, then download the entire investment commentary as a PDF. [+] Read More

Tax Planning: Don’t Forget Your Required Minimum Distributions

November 15, 2017

Republicans on Capitol Hill are currently working to make major changes to the tax code, but one tax rule does not seem likely to change anytime soon: required minimum distributions (RMDs). For most of our lives, investors have the benefit of saving into IRAs, 401(k)s, 403(b)s, etc. with tax-deductible contributions and tax-free growth, but eventually the day comes when Uncle Sam gets his cut. That starting point when the IRS requires you to withdraw from your IRA or other retirement account for is by April 1 of the year following the calendar year in which you reach age 70½ (which is 6 months after your 70th birthday). For example, if you are retired and you turned 70 on June 30, 2017, then December 30, 2017 marks the day you reach 70 ½. That means you must take your first RMD for 2017 by April 1, 2018. Every year thereafter, you have until December 31 to get it done. [+] Read More

Tax Prep: Gifting Strategies

November 1, 2017

With less than two months left in the year, time is running out to take actions that will apply to the 2017 tax year. By ‘actions’ we mean things like charitable giving, tax loss harvesting, and in the case of this post, gifting. Gifting and estate planning can be complex undertakings, due to the myriad of rules, strategies, and even loopholes involved. But the concept of gifting by itself can be rather simple: in 2017, you can give any number of people (it doesn’t matter how many) up to $14,000 in cash or other property without triggering any gift tax. If you include your spouse in the gift, that number jumps to $28,000. An example with actual numbers should underscore just how impactful gifting can be. Say for example that you and your spouse make annual gifts of $28,000 to each of your three children and seven grandchildren. Over a period of 5 years, you will have gifted $1,400,000 – which also reduces the value of your estate for tax planning purposes by $1,400,000. Assuming the federal estate tax rate of 40%, that could mean saving $560,000 in estate taxes (40% x $1,400,000). [+] Read More

What is Tax Loss Harvesting?

October 25, 2017

The White House released an outline for major tax reform in September. There are some ambitious goals in the plan: reduce seven individual tax brackets down to three, lower the corporate tax rate by 15%, eliminate the estate tax, nearly double the standard deduction while eliminating most itemized deductions, and much more. There could be some major changes ahead. But since so much remains up in the air as Congress debates the issue and actually writes the new law, it may not be worth diving into the details just yet. Instead, we’ll focus on a tax issue that is fast approaching for many investors: tax loss harvesting in preparation for your next tax filing. [+] Read More

An Initial Look at Trump’s Tax Reform Framework

September 28, 2017

After campaigning hard for the importance of tax reform, President Trump and his advisors released an early stage tax code change framework on Wednesday, September 27. From his podium in Indianapolis, IN, Trump explained that his framework would cut taxes for businesses and individuals and potentially deliver a “middle class miracle.”[1] As he put it, “…we will cut taxes for the everyday, hardworking Americans…”[2] While the House and Senate will still have significant work to do to in order to finalize the tax plan and craft new legislation, the initial review of Trump’s framework has some substantial changes to the current tax law, which could represent the largest tax reform change passed in 30 years.[3] [+] Read More

Tax Aversion – Doug’s Quiz Corner

March 9, 2016

Quizmaster, Doug Hutchinson, has come up with another great quiz for us regarding how tax aversion can sometimes lead investors to make sub-optimal investment decisions. Good luck! Consider this scenario: Your friend Jeff owns a mutual fund worth $100,000 in his taxable account. Jeff has been considering selling the mutual fund and replacing it with a similar investment with lower fees (and, therefore better projected net of fees returns). However, Jeff is leaning toward not selling his mutual fund because his cost basis on the mutual fund is $75,000, so selling it would create a taxable gain of $25,000. [+] Read More