As 2024 draws to a close and 2025 is just around the corner, this blog post focuses on year-end planning tips and steps you can take designed to ensure a strong start to the new year.
What Can You Still Do in 2024?
- Tax Harvesting:
- Details: Tax-loss harvesting involves selling securities at a loss to offset a capital gains tax liability. This strategy can be used to reduce your taxable income. It is important to be mindful of the wash-sale rule, which prohibits buying the same or substantially identical security within 30 days before or after the sale.
- Charitable Gifts:
- Details: Donating appreciated stock directly to a charity can be more tax-efficient than donating cash. This allows you to avoid capital gains tax on the appreciated value, and you may also receive a tax deduction for the full market value of the stock.
- Gifting:
- Details: You can gift up to $18,000 per recipient without incurring gift tax, thanks to the annual gift tax exclusion. This is a great way to reduce your taxable estate while providing financial support to family members.
- Maximize Retirement Contributions:
- Details: Ensure you have contributed the maximum allowable amount to your 401(k) and consider making additional contributions to an IRA or Roth IRA. This not only helps in tax deferral but also strengthens your retirement savings.
- Roth Conversion:
- Details: Converting a traditional IRA to a Roth IRA can be beneficial if you expect to be in a higher tax bracket in the future. Although you’ll pay taxes on the converted amount now, future withdrawals from a Roth IRA are tax-free.
How Can You Improve for 2025?
- Review Tax Withholding:
- Details: Work with your tax advisor to see if you should adjust your tax withholding to ensure you’re not overpaying or underpaying taxes throughout the year. This can help you avoid a large tax bill or a hefty refund, allowing you to better manage your monthly cash flow.
- Maximize Retirement Plans:
- Details: Plan your 401(k) contributions to ensure you are contributing the maximum amount allowed by the IRS. Consider setting up automatic contributions to evenly distribute your savings throughout the year, taking full advantage of employer matching if available.
- 401(k) “Super Catch-Up”:
- Details: Starting in 2025, higher catch-up contributions are available for employees aged 60 to 63. This allows you to make additional contributions beyond the standard limits, providing an opportunity to boost your retirement savings as you near retirement age.
Additional Steps
- Consult with a Professional:
- Details: Experienced financial advisors can help you identify any overlooked opportunities and help you adjust your financial plan to align with your goals. A team of experienced financial advisors can offer diverse perspectives and strategies for a more robust financial future.
By taking these steps, you can finish 2024 on a strong note and set yourself up for success in 2025.
This article is being provided for informational purposes and should not be construed as investment advice or relied upon as a basis for any investment or financial decision.
Duly-registered and duly-licensed representatives offer securities through Equitable Advisors, LLC (NY, NY (212) 314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI and TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC; Equitable Network Insurance Agency of Utah, LLC; Equitable Network of Puerto Rico, Inc.). Equitable Advisors and Equitable Network are affiliates and do not offer tax and/or legal advice or services. Beacon Wealth Partners is not owned or operated by Equitable Advisors or Equitable Network. PPG-7405620.1 (12/24) (Exp. 12/28)