As we approach year-end, it’s a good time to consider strategies that can help fulfill your financial goals while also providing meaningful tax benefits. One option worth considering for those aged 73 or older with Required Minimum Distributions (RMDs) is the Qualified Charitable Distribution (QCD).
A QCD allows you to donate up to $100,000 per year directly from your IRA to a qualified charity, counting toward your RMD but not being included in your taxable income. This approach can be especially beneficial if you don’t need your full RMD amount to cover living expenses. By reducing taxable income, a QCD can help minimize your tax liability and potentially keep you in a lower tax bracket, reducing the impact on your Social Security benefits and Medicare premiums. Plus, this strategy can be an effective way to maximize charitable contributions while meeting IRS requirements for RMDs.
If you plan on making a QCD, please note these important timelines to ensure everything is processed smoothly:
• Contact us by December 1st: Reach out early to allow sufficient time for transfers to be completed before year-end.
• Mail checks by November 15th: If you plan to send a check, mailing it by Thanksgiving will help ensure it clears by Christmas.
*Please remember that if you send in a charitable check from your Schwab IRA, you must follow up with the charity to make sure it clears before December 15th. If not, it may not be cleared in time to be counted as part of your RMD.
We’re here to help you make the most of this tax-efficient strategy and ensure it integrates seamlessly with your overall financial plan.
Open enrollment for health insurance is approaching, typically running from November 1st to December 15th for marketplace plans, though employer-sponsored plans may have different dates. Reviewing your health coverage is essential, especially if your needs have changed or if you anticipate any significant medical expenses in the coming year. High-deductible health plans (HDHPs) paired with Health Savings Accounts (HSAs) can be a cost-effective option, offering triple tax advantages: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. For 2024, the HSA contribution limit is $4,150 for individuals and $8,300 for families, with an additional $1,000 catch-up contribution allowed for those aged 55 and older. Review with us to identify if these strategies are appropriate for your situation.
In today’s rapidly changing financial landscape, maintaining up-to-date financial and legal authorizations is essential for effective planning and asset protection. One critical component of this is ensuring that you have established an “Authority to Contact” on file. This designation allows a trusted individual, such as a family member or close advisor, to communicate with us on your behalf if necessary, without giving them direct access to your accounts or assets. Establishing an Authority to Contact can provide peace of mind, especially during unexpected situations where quick communication is needed. It’s a simple yet effective step to ensure that those you trust can be informed or involved if needed, helping maintain the continuity of your financial plan. If you would like to set up or update an Authority to Contact, please reach out to us.
As year-end approaches, consider making tax-efficient gifts to children, grandchildren, or other non-charitable beneficiaries. The annual gift tax exclusion allows you to give up to $18,000 per recipient ($36,000 for married couples) without incurring gift tax. Staying within this limit generally means you won’t need to file a gift tax return. For a strategic transfer, consider gifting highly appreciated securities if the recipient is in a lower tax bracket; this allows them to pay lower capital gains taxes if they choose to sell.
Remember, all gifts must be completed by December 31 to qualify for the 2024 tax year. This means If you’re relying on us to make the transfer of securities for you please reach out to us by December 1st to ensure we have time to make those transfers internally on our end.
When requesting any type of money transfer from one account (IRA, brokerage, etc.) to another, you must call us to provide verbal confirmation of the transfer over the phone. This means we cannot act on email requests for money transfers, even if you have set up a Moneylink with us at Schwab. For example, with a joint account, we can accept verbal confirmation from either spouse, but for an IRA, only the account owner can provide confirmation. These steps ensure we stay in regulatory compliance on our end and help create safeguards for your funds on your end.
As always, we are here as a resource for those that you care about and for. If you are worried that your family and/or friends may have been given improper financial guidance or are losing their hard-earned assets, we are available for a free second opinion or guidance to make sure they stay financially safe.
Be well and have a wonderful week!