Ask Dana! A Column Where Personal Finance and Life Intersect By Dana R. Mascalo, CFP®, RLP®, AAMS®, C(k)P®
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he clock is ticking! With the end of the year approaching, here are some important financial planning and tax reminders to consider before 2021 is in the rearview mirror. Eight Important Reminders for 2021 1. Your income in 2021. Now is the time to assess what your expected 2021 taxable income will be. One major consideration that makes tax planning crucial this year are the policy proposals on the table that could increase taxes and capital gains, among other tax code changes. Also, similar to what we saw in 2020, many jobs and income levels changed this year due to the economic recovery, people moving, or going back to work. Depending on your personal circumstances, either consider tax planning strategies that can reduce taxable income now or, if it may help you in the future, increase your taxable income now at lower potential rates. You could consider Roth conversions, funding pretax or Roth retirement plans, creative profit sharing moves for business owners, tax bracket management, gifting, and so much more. 2. Investment gains and losses. If you are an investor with taxable, non-retirement accounts, you may have experienced tremendous growth in your investments over the last several years. Now is the time for assessing realized capital gains and tax loss harvesting. Although we are mindful of this for our clients’
Seeking outside advice from professionals when you need it for tax, legal, or financial advice can make the overall process easier and less stressful for you.
investment accounts all year long, the fourth quarter is “the most wonderful time of the year” to manage the gains and losses in taxable investment accounts. Use this time to see how you have done with your investments and determine if you want to sell to take any gains or losses in 2021. And remember—this is even more important if the increased capital gains tax is placed into effect. 3. Are you saving enough through your employer retirement plans? Take a moment now to check your paystub details and see how much you have saved this year. December 31 is the last day for elective contributions through your employer 401(k)/403(b) plans. For 2021, the maximum contributions are typically $19,500 if you are under 50, with $6,500 catch up if over 50. 4. Are you a small business owner without a retirement plan? If the answer is yes, there is still time to set up certain plan types by December 31, 2021. Ask your personal advisor or tax professional
what the best plan is for your business. If you don’t have an advisor, give our team a shout and we will be your guide (with bells on)! 5. Investment allocation review time! Are you positioned for the current market risks we are seeing today, such as COVID, inflation, higher taxes, political concerns, international risks, and so on? Remember to review your allocation and see if you are where you want to be, or simply review your accounts with a qualified advisor. 6. Feeling charitable? For those who make larger contributions, consider the following for the most bang for your buck: • Qualified Charitable Deductions from IRAs (for those over 72) • Donating appreciated stock from taxable accounts • Clustering annual donations with donor-advised funds This is a huge area of interest right now, especially for higher-income clients facing large tax bills. Please see our website or contact TrinityPoint Wealth for more information. 7. How about your estate plan? At TrinityPoint, we ask our clients, “What would you like to have happen with your money if something happens to you?” It is so important to make sure beneficiary designations and estate www.NaturalNutmeg.com
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