We hope that you are safe and recovering from any damage that Hurricane Irma sent your way. We would like to take a moment to provide tips on how to finish the year strong and keep you moving toward your financial goals. We are heading into a hectic time of year with the holidays. We thought now would be a good time to share some ideas for shoring up your finances at year-end so that you stay on track.
How to get the most bang for your buck at year end
Pay less in federal and payroll taxes
a. Maximize your 401k by year end if possible. The max is $18,000 (or $24,000) if over 50). The more you put into a 401k, the lower your taxable income.
b. Payroll Tax -Anyone making over $127,200 will maximize their payroll tax, which means they should be receiving extra income in their net pay. What to do with this? Consider paying down debt, contributing to a Roth IRA or Traditional IRA, or saving for a child’s education (529, prepaid, ESA).1
Lower your AGI – Charitable Giving using your RMD
a. If you own an IRA and are over 70 ½ OR have an inherited IRA, you must take your required minimum distribution (RMD) for this year (unless decedent passed in 2017) by Dec 31, 2017
b. Eliminate the tax paid on your RMD -If you don’t need your RMD, consider donating it directly to a charitable organization. It will not be included in your AGI, thus benefiting you in these ways:
a. May avoid Medicare surcharge tax2
b. May lower the taxable portion of your Social Security benefit
Important Deadlines
Healthcare Open Enrollment
Affordable Care Act open enrollment Nov 1, 2017 – Dec 15, 2017
Medicare open enrollment Oct 15, 2017 – Dec 7, 2017
Retirement account openings
Open a SIMPLE IRA Oct 1, 2017
Inherited IRA must be funded by Sept 30, 2017
Required Minimum Distribution (RMD) Dec 31, 2017
401k/Profit Sharing Establishment Dec 31, 2017
Education preparation
FAFSA (Free Application for Financial Student Aid) Oct 1, 2017 – June 30, 2018
Florida Prepaid open enrollment begins Oct 15, 2017-Feb 28, 2018
Other Housekeeping Items
1. Review beneficiaries on all accounts – Life insurance, brokerage, retirement, etc.
2. Check to see how your budget is stacking up so far and what you need to do to keep it on track.
3. Benefits open enrollment – Most companies have their open enrollment sometime near year end. Take advantage of Health Savings Accounts (HSA) and Flexible Spending Accounts if offered.
As always, please contact us with any questions or for more in depth advice. We look forward to hearing from you.
1It is best to speak with your advisor who knows your individual situation in order to determine the best course of action.
23.8% Medicare contribution tax on investment income; applied to the lower of net investment income or modified adjusted gross income (MAGI) over certain thresholds ($250,000 joint filers/$200,000 single filer) for 2017.
Written By: Paul Roldan, Chief Executive Officer Allgen Financial Advisors, Inc.; Ana Fernandez, CFP® and Teresa Talton, CFP®
Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. Allgen Financial Advisors, Inc. (“Allgen”) is an investment advisor registered with the SEC. Allgen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by Allgen. It is not intended to be a solicitation or offer to sell investment advisory services to residents of any state in which Allgen is not currently authorized to do so. The Disclosure Brochure, Form ADV Part II, which details the business practices, services offered, and related fees of Allgen, is available upon request.
