Time is running out! There are a number of year-end financial planning opportunities with a December 31st deadline that we would like to remind you of.

Time is running out! There are several year-end financial planning opportunities with a December 31st deadline that we would like to remind you of. If any of these are of interest, please let us know as soon as possible. You can contact Jaycee Smalley at jsmalley@newcapitalmgmt.com or 713-388-6322.

Charitable Gifting and Bunching

Now is the time to contribute to your Fidelity Charitable Donor Advised Fund before year-end. We recommend contributions of highly appreciated stocks which will help you to avoid capital gains tax on those securities and still receive a tax deduction for the full amount. If you are working or still in a high-income tax bracket and you itemize your deductions, bunching may be an option for you as well. Bunching is a “lump-sum” of charitable contributions made in a single year, allowing you to surpass the standard deduction and fill your charitable account for several years of donation recommendations.

Annual Gifting

If you are planning to make any gifts to family or friends and would like to utilize the annual $17,000 exclusion limit, per person, you have until the end of the year to do so.

401(k) Contributions

If you have not already done so, you may choose to max out contributions to your workplace retirement plans. The annual contribution limit for 2023 is $22,500 and a $7,500 catch-up contribution allowance for those age 50 and over. Contributions to these accounts typically decrease your taxable income and lower your tax liability.

Roth Conversions

Roth Conversions are a way to accelerate income into a single year in which you have low income. The goal is to pay the tax now at a lower tax rate than you may later in a higher tax bracket if that were to materialize either in tax law changes or an increase to your income tax bracket through other income sources. You would also have the converted funds to grow tax-deferred and eventually tax-free upon withdrawal from the Roth IRA. If you are already paying a high tax rate it does not make as much sense. We have tools to run simulations to see if you would benefit from a Roth conversion.

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