Turkey Day has come and gone. We hope you and your family enjoyed good food, time together, football games, and maybe some early holiday shopping. We are moving now into the holiday season and we know your attention is on all the events and activities that make the season so special. This will be our last blog post and email to you until next year, but there are a few things that may need your attention before December 31. We are here to help with anything you need!
Required Minimum Distributions
For IRA and Inherited IRA accounts with Required Minimum Distributions (RMDs) for 2025, those amounts need to be taken from the account by December 31. For all accounts we manage, this has either already been done or we have a plan with you to get this done soon. For accounts that you might have somewhere else, we can help you check to make sure your RMDs are distributed as required. For IRAs that were inherited after 2020, the rules are a bit more complicated, so please reach out if we can help you with those.
Roth Conversions
For many of our clients who retire before they are required to take IRA distributions, Roth conversions make sense for long-term tax planning. If Roth conversions are a part of your tax planning strategy for 2025, they must be completed by December 31.
Capital Gains and Losses in Taxable Accounts
We sent you a summary recently with your realized gains and losses so far for 2025, as well as the unrealized gains or losses in your taxable (non-retirement) accounts that we manage. If you have questions about selling any holdings in your taxable accounts in order to harvest a tax loss or take a gain, please let us know. We have reviewed your accounts and can answer your questions.
Charitable Gifts
In order to take a deduction in 2025 for charitable gifts, the gift must be made before December 31. This includes transfers to Donor Advised Funds and Qualified Charitable Distributions from IRAs. For the Donor Advised Funds that we manage, the grant request deadline is December 17 to be sure the check is mailed by year-end.
Annual Gift Limits
If you are concerned about estate taxes in the future (estate taxes will affect estates larger than $15 million per individual and $30 million per couple beginning next year), you might want to make annual gifts that fall below the annual exclusion amount. These gifts do not count toward the lifetime exclusion amount for estate taxes. For 2025, you can make gifts of up to $19,000 to another person or $38,000 to another couple without triggering gift tax reporting requirements. If that is part of your planning strategy, be sure to make the gifts by December 31.
Make 401k Contributions
While you have until the tax deadline next year (April 15) to make IRA contributions for 2025, most employer plans require contributions to be made by December 31 for the current tax year. You may be able to adjust your paycheck withholdings for the last pay period or two of the year to contribute more to your 401(k). The maximum deferral amount into a 401(k) this year is $23,500 (employer contributions and matching are in addition to this limit). If you are over age 50, you can contribute an additional $7,500 and if you are 60-63 years old this year, you can contribute an additional $3,750 above that!
Make HSA Contributions and Use FSA Dollars
Like with IRAs, you have until April 15 next year to make HSA contributions for 2025. The limit is $4,300 for individuals and $8,550 for families. For FSA (Flexible Spending Accounts) and Dependent Care FSA accounts, the deadline to contribute and to use the funds is December 31. Some FSA plans allow up to $660 to be carried over to the next year, but many don’t. Use your FSA funds and Dependent Care FSA funds this month.
Complete Open Enrollment
Many employers have already closed their open enrollment windows for employee benefits. Open enrollment is still ongoing for Marketplace plans, but you need to sign up by December 15 for coverage to begin on January 1. Medicare open enrollment ends on December 7. If you need help evaluating your options, please reach out to us ASAP!
We wish you a very warm holiday season and we thank you for allowing us to serve you. We are here if you need us!
Together Planning is a registered investment advisor. The information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Together Planning has a reasonable belief that this marketing does not include any false or material misleading information statements or omissions of facts regarding services, investments, or client experiences. Together Planning has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein.