For more information, contact Ryan Smith at rsmith@dopkins.com.

Autumn is here, and that means it’s time for end-of-year planning. This part of the financial planning process not only ensures you meet mandatory deadlines, but it also brings up possibilities to minimize taxes and revisit your overall goals. With ample legislative changes on the horizon, these questions are designed to guide you through a few key strategies to consider before December.

1. Are you required to take an RMD from a traditional IRA, retirement plan or inherited IRA?

A required minimum distribution (RMD) is a withdrawal that must be taken from certain retirement accounts starting when the account owner reaches age 73. The first deadline to take an RMD is April 1 in the year after turning 73. All subsequent RMDs must be taken by Dec. 31. In addition, some account owners are required to withdraw the entire balance within 10 years. In July, the IRS issued new regulations related to RMDs that will affect beneficiaries who inherited accounts from which the original owner already begun taking RMDs. Effective Jan. 1, 2025, non-eligible designated beneficiaries (generally someone other than the original owner’s spouse) must continue taking RMDs annually to satisfy the 10-year rule. Even if you’re not required to take distributions this year, doing so could help save on taxes in the long run.

2. Is it time to revisit your estate plan?

Simply put, an estate tax is what the government charges on your assets for the right to transfer them to heirs upon death. As of the 2023 tax year, individuals are exempt from paying the federal estate tax if their estate is valued below $13.61 million, or $27.22 million for married couples. However, pending no action from Congress, the exemption amounts will drop to about $7 million per person when the 2017 Tax Cuts and Jobs Act expires on Dec. 31, 2025. If your estate exceeds that amount, you may want to speak with your wealth advisor and a team of estate and tax planning professionals to explore strategies you can begin implementing now to reduce your taxable estate. At the state level, estate tax rules also vary, so it’s important to understand how the laws in your state may impact your planning.

3. Could you benefit from a Roth conversion this year?

A Roth conversion allows you to transfer pre-tax assets, such as traditional IRA assets, to a Roth account in a single amount or over multiple years. Depending on your circumstances, Roth conversions can provide several benefits, especially for optimizing your savings and minimizing taxes over the long term. While you’ll owe taxes on the funds in the year you complete the conversion, once they are in a Roth, you won’t have to take RMDs later as you would with a traditional IRA. The funds will also grow tax-free, enabling tax-free withdrawals once you’ve owned the account for at least five years and reached age 59½. That means planning conversions at the right time can help you reduce your overall lifetime tax burden and manage your tax bracket in retirement. Additionally, Roth conversions can play a key role in estate planning, allowing you to pass on tax-paid assets to your heirs. The deadline for Roth IRA conversions is Dec. 31 in the year you want it to affect your taxes.

4. Are you charitably inclined and intending to make donations to lower your tax bill?

Charitable giving is an important part of many individuals’ financial plans. If you intend to make charitable donations before the end of year, your wealth advisor can work with you to identify the appropriate frequency and size of your contributions, recommend strategies to give efficiently, and align your giving strategy with your overall financial goals. Strategies to consider include bunching, qualified charitable distributions (QCDs), use of donor-advised funds (DAFs) and charitable trusts.

Keep in mind that the above strategies may not be appropriate for everyone, instead representing a few tax-saving strategies that have deadlines before year-end. Your wealth advisor can help you better understand the best opportunities for your needs.

* Dopkins Wealth Management, LLC is a registered investment advisor owned by the partners of Dopkins & Company, LLP.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third-party data and may become outdated or otherwise superseded without notice. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. R-24-7650
©️ 2024 Buckingham Wealth Partners. Buckingham Strategic Wealth, LLC & Buckingham Strategic Partners, LLC (Collectively, Buckingham Wealth Partners)

About the Author

Ryan C. Smith CFP®

Ryan provides financial solutions to individuals, trusts and businesses. His services include guidance to clients regarding financial planning, investments and portfolio analysis.