Year End Planning (It’s Not Too Late)

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We are heading toward Christmas and The New Year at lightning speed. We are only weeks away from 2023. 

It looks like we came off Black Friday and Cyber Monday with lots of shoppers and over the past week we have had better-than-expected economic data, yet the stock market has dropped. What are we to make of that??

Right now, all of the pundits are trying to read the tea leaves (so to speak) about what is likely to happen at the next Federal Reserve Meeting this week.

Oddly enough, it seems like bad economic news – higher unemployment, weaker consumer spending, and home sales are good for the stock market. It means the Federal Reserve is likely to hit the brakes on rate increases.

A few things to keep in mind as we head into 2023. 

The law pending in Washington to change the IRA rules yet again has not yet been signed into law. They are calling this The Secure Act 2.0, the changes are designed to do things like – 

Expanded access to retirement plans at work. Additional investment options; Increase savings. Simpler plan administration.

The big change for many people planning is a change to the age of the fist Required IRA distribution age from 72 to 73,74,75. This should be known as the “First Mandatory Income Tax Age” for your IRA. The IRS forces you to take money from your IRA and pay taxes. 

Will the Bill pass this year or next year?

So, what moves can people consider now in their end-of-year planning?

A few things come to mind when we do year-end planning with clients –

Roth Conversions – 

The historically low tax rates that exist now expire BY LAW in 3 years. We have an opportunity to move money from the tax later bucket (Traditional IRA) to the tax never bucket (The Roth IRA)

Strategize charitable deductions – 

Last year there was a $300 or $600 donation deduction for non-itemizers. NOT this year. However, due to the increase in the standard deduction in the 2017 tax change.  Currently, 87% of people take a standard deduction. If you are married it’s almost $26,000, If you are over 65 it’s about $29,000.  Why not consider “bunching” your charitable contributions?

What about gifting from an IRA?

That is a great move for someone over the age of 70 1/2 The gift is Called a Qualified Charitable Distribution 

Is this an option for you?

We hope you enjoyed your Thanksgiving and are looking forward to the upcoming holidays. 

Here’s some of what you’ll learn in this episode:

  • How economic news affects the stock market. [3:44]
  • We discuss the first required IRA distribution age changes. [6:20]
  • What to consider if you’re in a higher tax bracket or don’t plan on leaving wealth to family. [10:31]

If you want to discuss your investment strategy or have someone give your portfolio a second opinion, please reach out and we’ll set up a time to talk.

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Donald W. Cash – CPA, CFP®, is an independent advisor. After graduating from Rutgers University, he began his career in 1985 as an accountant. In 1990, he entered the field of Estate Planning, concentrating on long-term care planning. Don has been advising clients in the baby boomer and retirement market for 20 years. He has helped over 1,000 families with their planning needs.

Don advocates for a holistic approach to Estate and Financial Planning and has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers.

He is married to Cathy and they have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.

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