7 End-of-Year Strategies to Boost Investments and Trim Your Taxes

Max Out Your Retirement Contributions   

One of the most effective ways to reduce your taxable income while boosting your long-term financial security is to maximize your contributions to tax-advantaged retirement accounts. Consider the following: 

• 401(k) or 403(b): Aim to reach the annual contribution limit, which is $22,500 for 2024 (or $30,000 if you're 50 or older). 
• IRA: You can contribute up to $6,500 for 2024 ($7,500 if you're 50 or older) to a traditional or Roth IRA, depending on your income level and eligibility. 

Remember, contributions to traditional retirement accounts are typically tax-deductible, potentially lowering your current year's tax bill while setting you up for a more comfortable retirement. 

Harvest Tax Losses      

If you have investments that have declined in value, consider selling them to realize the loss for tax purposes. These losses can offset capital gains from other investments, potentially reducing your tax liability. Just be mindful of the "wash-sale" rule, which prohibits repurchasing the same or a substantially identical security within 30 days. 

Consider Roth Conversions        

If your income is lower this year or you're in a lower tax bracket, it might be an opportune time to convert some of your traditional IRA funds to a Roth IRA. While you'll pay taxes on the converted amount now, future withdrawals from the Roth IRA will be tax-free, potentially saving you money in the long run.  

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Make Charitable Contributions      

Donating to qualified charities not only supports causes you care about but can also provide tax benefits. Consider the following strategies: 

• Donate appreciated securities: By donating stocks or mutual funds that have gained value, you can avoid capital gains taxes and potentially deduct the full market value of the donation. 
• Establish a Donor-Advised Fund: This allows you to make a large charitable contribution now, receive an immediate tax deduction, and then recommend grants to your favorite charities over time.

Review Your Investment Mix     

As the year winds down, it's an excellent time to review your investment portfolio and ensure it still aligns with your goals and risk tolerance. Consider rebalancing if your asset allocation has shifted significantly due to market movements.  

Plan for Required Minimum Distributions (RMDs)   

If you're 73 or older, don't forget to take your required minimum distributions from your traditional IRAs and 401(k)s. Failing to do so can result in substantial penalties. If you don't need the income, consider using your RMD to make a qualified charitable distribution, which can satisfy your RMD requirement without increasing your taxable income. 

Plan for Required Minimum Distributions (RMDs)   

Depending on your tax situation, you might benefit from accelerating deductions into the current year or deferring income to the next. For example, you could prepay your January mortgage payment in December to claim the interest deduction this year, or ask your employer to defer a year-end bonus until January if you expect to be in a lower tax bracket next year. 

Remember, everyone's financial situation is unique, and what works best for one person may not be ideal for another. That's why at WHZ Wealth Advisors, we take a personalized approach to financial planning. We're here to help you navigate these decisions and create a strategy that aligns with your specific goals and circumstances. 

At WHZ Strategic Wealth Advisors, we're here to help ensure you finish the year strong and start the new year on solid financial footing, giving you “Absolute Confidence. Unwavering Partnership. For Life.” Visit our website at whzwealth.com to schedule your complimentary consultation or give us a call at (860) 928-2341.       

Authored by Vice President, Associate Financial Advisor, Michael Baum, CFP® RICP®. Securities and advisory services are offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. WHZ Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084. 860-928-2341. www.whzwealth.com.