End of Year Financial Considerations

The end of the year is the perfect opportunity to dot your I’s and cross your T’s when it comes to your financial hygiene. Whether it’s remembering to take your required minimum distribution or finalizing your charitable giving for the year, here are a few important year end planning opportunities and strategies to consider:

Required Minimum Distribution (RMD) Reminder

Although the IRS allows you to defer taxes on certain types of accounts—you can’t defer your taxes forever! That’s where RMDs come in. Starting at age 73, you are required to take a certain minimum amount from these accounts each year and pay taxes on those distributions. If you have multiple accounts, the RMD for your IRA(s) and employee-sponsored retirement accounts are calculated separately.

If you are required to a take a distribution from your IRA, please make sure to take your RMD(s) from your IRA(s) or qualified plan(s) before December 31, 2023. If you fail to do so, there could be an IRS penalty. If you are unsure of if this affects you and your accounts, please contact your Johnson Financial Group Advisor to review your current RMD figures, and if you have any questions related to your RMD requirements, now is a great time to reach out to your tax preparer.

Roth Conversion

Having a mix of traditional IRA dollars and Roth IRA dollars can provide greater flexibility and tax bracket management in retirement. If you currently do not have Roth IRA dollars, you could consider converting some of your traditional IRA. An added benefit of converting now, in a down market, is experiencing the market recovery with tax-deferred and tax-free growth in the Roth account. Though the process of conversion is relatively simple, there are some important considerations to take into account, which you can learn more about in our “What to Know About Roth IRA Conversions” article.

Charitable Giving

‘Tis the season for giving! If you are interested in philanthropy, there are ample charitable giving opportunities to take advantage of before the year is out. From direct giving to donor advised funds and private foundations, view our charitable giving articles series to learn more about the different strategies, including costs, control, tax benefits, ongoing burden, and legacy.

Preparing for 2023 taxes

As Benjamin Franklin once said, “Nothing can be said for certain, except death and taxes.” Now is the time to start collecting your tax documents now so you can be prepared come tax time in early 2024. Copies of your tax documents for your account(s) will be available early in the new year through our Wealth Management & Trust portal. Contact your Johnson Financial Group Advisor if you are interested in discussing any of the above opportunities or have questions about access to our Wealth Management & Trust portal.

As we enter the new year, keep your eye out for income-related tax forms like W-2s and 1099’s in the mail. It’s never a bad idea to begin gathering documentation for any additional deductions or credits that you might be eligible for as well. (Aren’t sure how long to save these tax documents and other financial documentation? Check out our article on spring cleaning for financial records.)