Year-End Strategies

Dec 2017


It is hard to believe that 2018 is just around the corner.  Because of that I wanted to touch upon a couple of issues that may require your attention before the end of the year.  However, before I mention those items, I would like to once again mention holiday spending.


I cannot stress enough the importance of not overspending during the holiday season.  This time of year many of us get caught up in the spirit of the holiday and we succumb to endless advertising ploys to get us to spend, spend and spend some more.  It is important that we act like adults and stay within our means.  You can be fiscally responsible 11 months of the year but that one month where you let your guard down can cause your finances to implode.  It is important to set a budget for your holiday shopping and stay within that budget.  The holiday is about spending time with family and friends and enjoying their company; not overspending and causing you financial difficulties.  As a reminder, if you charge your holiday gifts and cannot afford to pay them off in full when the bill comes, it’s probably a sign you’re overspending.


The end of the year creates certain opportunities that many of us should explore.  One of those is to convert existing traditional IRAs into a Roth IRA.  The transaction must be completed before the end of the year and therefore, there is not much time left to take advantage of it.  The beauty of a Roth conversion is you’re taking money that is growing tax deferred and converting it into money that will grow tax free.  For many people this is an opportunity that they should take advantage of.  It is not for everyone; however, there are many people who should take advantage of it but don’t.  Therefore, it’s a good idea to look at your tax situation to determine if a Roth conversion makes sense for you.


Another item that some of you may wish to take advantage of that can be a significant tax saver is for those of you who are over 70½ and by law are required to take a distribution from your retirement account.  For those of you who are charitable in nature and who make charitable contributions, donating all or a portion of your minimum required distribution can be a very good move.  Particularly for those of you who do not itemize your deductions, this strategy can result in significant tax savings.  Like most dealings with our tax laws, it is important to always dot the i’s and cross the t’s; this transaction is no different.  The key is the money from your IRA must go directly to the charity.  Therefore, if you are going to do this it is important that you contact your IRA custodian as soon as possible to begin the process.


The traditional year-end tax plan strategy is to accelerate your deduction into this year.  Although that works for some people, it is not for everyone.  I want to remind you that when you hear year-end tax advice it is important to remember it may not apply to you.  Each one of our tax situations is a little different and therefore, just because it is a strategy that works for your brother-in-law, that doesn’t mean it will be a strategy that works for you.  When it comes to accelerating deductions into this year, if you are itemizing your deductions, then it’s generally a favorable strategy.  On the other hand, if you’re taking the standard deduction, then the strategy is generally meaningless.


For those of you with a flexible spending account through work, you need to make sure you understand the terms of that program to determine whether you must use that money before the end of the year or not.  In some plans, if you don’t use the money before the end of the year, you lose it.  You work too hard for your money to lose it; that is why it is important that if you have a flexible spending account you understand the terms.


The holidays are rapidly approaching and there are not that many days left in 2017.   Therefore, if you plan implement any year-end strategies, you no longer have time to delay; the time to act is now.


Good luck!




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