David A. D’Ambrosio, BridgeTower Media Newswires
As we approach the end of 2019 there is still time for some very important financial and investment planning items before the calendar turns to 2020. Here are a few to consider if you have not done so already:
1) Retirement plan contributions
If you have the opportunity to participate in an employer-sponsored plan like a 401(k) or 403(b) then you may still have time to increase your annual contribution via your payroll. For 2019, the annual limit is $19,000 for individuals who are 50 and younger. If you are over the age of 50 you can make an additional catch-up contribution in the amount of $6,000.
Remember, these contributions must come from your payroll deferrals and not from your own personal funds. This is also a good time to consider increasing your contributions for 2020, which will allow you to get a head start on adding retirement savings heading into the New Year.
2) Required minimum distributions
If you are over the age of 70 1/2 you are required to take a mandatory distribution from your Traditional IRA and 401(k) plan accounts. If you fail to do so, a 50% penalty will be imposed to you from the IRS on any amount not taken. You can always take more than the required amount, but make sure you take the minimum to avoid the penalty. Contact your investment professional or brokerage custodian to make sure you have met the required distribution limits.
3) Year end investment tax losses
With a strong year in the stock and bond market taking investment losses may be hard to accomplish this year; however, you may have investments that have not performed well over the past several years. If this is the case, you may wish to sell those loss positions. The IRS allows a maximum of $3,000 of losses that can be used to offset your taxable income for the year. If your losses are greater than $3,000 the additional losses can be carried forward to future tax years. Remember, this only applies to your personal investment accounts and not retirement portfolios.
4) Reevaluate your investment portfolio
We are approaching 11 years into this current bull market. Your investment time horizon, goals, and risk tolerance probably have changed over the past decade. It is always a good idea to take a comprehensive approach when reviewing your overall asset allocation to determine where you stand in terms of your current stock and bond allocations. If you decide your exposure to stocks is higher than your comfort level then it is a good time to rebalance your portfolio and lighten up on equities. This is also a good time to review the diversification of your overall portfolio. Consider diversifying your stock and bond investments globally, across different sized companies and industries.
5) Gifting
Currently, the IRS allowable annual gift exclusion for 2019 is $15,000 per individual. This means you can give $15,000 to as many people you would like without filing a gift tax return. And, if you are married the annual gift exclusion doubles to $30,000 to any one recipient. The exclusion not only implies to cash gifts but to your investments as well. If you have appreciated investments with large unrealized gains you can gift those securities to an individual or charitable organization.
Please make sure you check with your investment professional or accountant if you have questions on the items above and if you are looking to explore these important topics before the clock strikes midnight on the 31st of December.
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David A. D’Ambrosio is a Vice President at Karpus Investment Management, a local independent, registered advisor managing assets for individuals, corporations, nonprofits and trustees. Offices are located at 183 Sully’s Trail, Pittsford, NY 14534; phone (585) 586-4680.
