5 Year-End Investment and Tax Strategies to Consider before New Year’s

Last Updated: December 17, 2015

As 2015 comes to a close, it’s time to tidy up your investment portfolio, pay attention to year-end tax deadlines and build your plan for 2016. Here are five strategies you can use every December to wrap up the old year and bring in the new:
  1. Re-evaluate Your Household and Personal Goals Assess your goals and evaluate your changing household dynamics.  Have your children married, divorced, or had grandchildren?  Has your retirement vision or experience during retirement changed?  Have you or a significant other had a health scare?  As you evaluate your investment plan, consider any life changes to make sure your risk tolerance is appropriate to meet your goals for the new year.
  2. Review Your Asset Allocation and Rebalance if Necessary After evaluating your goals, verify your asset allocation reflects your investment objectives and goals. Your original asset allocation will have changed over the past year due to the differing returns from the different asset classes.  Rebalancing will allow you to buy and sell different asset classes to realign your allocation to match your original portfolio or your new allocation strategy.
  3. Withdraw Your RMDs (Required Minimum Distributions) Almost everyone knows about his or her RMDs, but you would be surprised how many people mess this up.  The IRS requires you to start withdrawing money from your tax sheltered investment accounts (i.e. Traditional IRA’s) at age 70 ½.  The IRS also sets the rules for how much you are required to withdrawal each year, but it is based on your age and the amount of money in your deferred investment accounts.  I bring this up because the penalty for missing your RMD before year-end could be up to 50% of the sum you are required to withdrawal.
  4. Donate to Charity and/or Take Advantage of Gifting Strategies to Heirs Your taxes are not due until April of the following year, but if you want your charitable contributions to count for this tax year, make them by December 31.  The IRS and other organizations publish lists of 501(c)(3) approved charities if you are looking for a different charity this year. Another tax saving strategy is gifting to your heirs. If you are single, you may gift up to $14,000 to each heir and up to $28,000 to each single individual heir if you are married. This estate planning strategy allows you to help out family members today while lowering your estate tax burden once you pass.  It’s also important to mention that if you stay within these gifting limits, the recipient receives the funds tax free.
  5. Consider Tax Loss Harvesting For investors that have taxable brokerage accounts, you may take advantage of a strategy called “tax loss harvesting.”  Tax loss harvesting involves the selling of underperforming investments in your account to offset capital gains for the current year.  The IRS allows you to use up to $3,000 in capital losses to offset your capital gains or ordinary income if applicable. It’s important to work closely with your advisor to make sure this strategy will help you reach your long-term goals.
Pension Consultants’ RetireAdvisers® are dedicated retirement consultants that can assist you in identifying and implementing retirement planning strategies – not only at year-end, but throughout the year as well.  If you have any questions regarding any of these strategies, please contact us at 1-800-234-9584 or RetireAdvisers® Team.
  PCI’s archived blog entries are dated, the rules and statutes referenced may have changed. The analysis or guidance within these blog entries may have become stale, dated, or no longer accurate. PCI will not update or change these entries to reflect the latest analysis or development.


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