Submitted by Nancy J. LaPointe, MBA, CFP®, ChFC®, CLU®, CASL®, for Navitage Financial
It is a wonderful time to begin organizing your finances for the New Year. Our team has put together a list of important financial planning topics that warrant consideration.
Re-characterization of Roth IRA rollovers or conversions
If you converted a traditional IRA to a Roth IRA during 2013 and paid tax on the conversion, mark your calendar now to allow plenty of time to meet the October 15, 2014, deadline for re-characterizing (i.e., undoing) the conversion.
Retirement planning
Review your retirement plan allocation and contribution elections. If you’re not taking full advantage of any matching features or potential tax benefits for maximizing your contributions, now is the time to evaluate your ability to do that. Also, when it comes to qualified savings, assessing your allocation to ensure that it’s still in balance and pursuing your objectives will help you start the New Year off on the right foot. Adjust your allocations now early in the year. If you did not contribute to or maximize your contribution to a Roth or Traditional IRA in 2013, you can still open or contribute to an IRA for 2013 if you act before April 15 2014. Reach out to me, or your advisor for details, and to explore your options.
Taking stock of savings
Did you set savings goals for the past year (2013)? Make a realistic assessment of how well you’ve met those goals and think about your goals for the upcoming year (2014). There’s no reason why you can’t make some financial resolutions along with your other New Year’s vows. If you determine that you are off track, let us help you develop and monitor a financial plan.
RMDs If you’re turning 70½, you need to devise the best strategy for taking required minimum distributions from your traditional IRA and 401(k) plans in the new year. You do not want to fail to take this important distribution, the penalties are quite steep.
Too little or too much withholding. Monitor your withholding; the goal is to balance two objectives. Minimize your tax bill while avoiding having the IRS stockpiling your money without earning interest. It is not prudent to use IRS withholding funds system as a savings program. Also of note is that workers with gross earned income of more than $200,000 may have had too little or too much tax withholding in 2013. Employers may have withheld an additional 0.90-percent tax on incomes over $200,000 without regard to the taxpayer’s withholding status, which would put these taxpayers at a higher threshold. Other taxpayers may have had too little withholding because of other income unknown to the employer due to second jobs. Employees should plan to take a credit on their returns or pay additional taxes.
Estate planning
To help ensure that your estate plan stays in tune with your goals and needs, you should be reviewing and updating it on an ongoing basis. Take time now to:
- Check trust funding
- Account for any life changes
- Update beneficiary designations
- Review trustee and agent appointments
- Review provisions of powers of attorney and health care directives
- Prepare for the distribution of personal belongings
- Get a firm understanding of all of your documents
Consider seeking professional guidance
The above list of financial planning information and dates is not exhaustive. I’m happy to go over deadlines and concepts that are most relevant to your personal situation, so you can better prepare in the New Year.
Whatever your planning may entail, we wish you a happy, healthy, and prosperous 2014!
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
IRS CIRCULAR 230 DISCLOSURE:
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Nancy J. LaPointe,MBA, CFP®, ChFC®, CLU®, CASL®,Financial Planner, Wealth Manager,
NAVIGATE FINANCIAL is located at 4520 Intelco Loop SE, Suite 1D Lacey, WA 98503. She offers securities and advisory services as an Investment Adviser Representative and a Registered Representative of Commonwealth Financial Network®, Member FINRA/SIPC. She can be reached at 360 628 8175 or at Nancy@navigatefinancialNW.com
