As the year winds down, it’s the perfect time to review financial plans and make sure that you are taking advantage of tax-planning opportunities before December 31st. Below are various strategies that can add significant value.
Here are 10 actionable strategies to consider:
1. Tax Loss Harvesting: Offset Gains with Strategic Losses
Selling underperforming positions to realize losses can offset capital gains and reduce tax liability. This is especially useful after the last three years of solid gains in the stock market.
Next steps: We will review realized gains and identify positions that could generate offsetting losses while avoiding wash sale rules where possible.
2. Roth Conversions: Take Advantage of Low-Income Years
Converting traditional IRA assets to a Roth IRA can lock in tax-free growth for the future. This works best in years when income is lower than usual.
Next steps: This approach typically works best when retirement is 10+ years away. Give us a call, or consult with your CPA if you’d like to explore this option futher.
3. Review Itemized Deductions: Bunching and Timing Matter
With higher standard deductions, bunching charitable donations or medical expenses into one year can help clients exceed the threshold.
Next steps: We are happy to discuss various strategies, including the use of a donor-advised fund to lump your donations together. Coordinate with CPAs to align timing with broader tax strategies.
4. Tax-Efficient Funds: Easy Wins for Taxable Accounts
Switching to tax-efficient funds can reduce capital gains distributions and improve after-tax returns.
Next steps: We will assess the tax efficiency of the specific investments in your account and may reach out with recommendations.
5. HSA Contributions: Maximize Triple Tax Benefits
HSAs offer tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. They can also serve as a stealth retirement account for funds that aren’t used for medical expenses.
Next steps: We are happy to educate on the benefits although we don’t currently offer HSA savings accounts.
6. Spousal IRAs: A Hidden Gem for One-Earner Families
Non-working spouses can still contribute to an IRA if household income allows. This helps build retirement savings for both partners.
Next steps: Let us know if you think this situation applies to you, and we can discuss your options.
7. Catch-Up Contributions
Clients age 50+ can make extra contributions to retirement accounts.
Next steps: Review your personal situation and consider making a catch-up contribution. IRA accounts allow for 2025 contributions to be made before April 15, 2026.
8. Portfolio Rebalancing: Align with Risk Tolerance and Goals
Market swings can skew allocations. The US stock market has outperformed most other asset classes over the previous three years. Your allocation may need to be rebalanced to stay within your risk tolerance.
Next steps: We will review and reach out with specifics should we need to rebalance your Raymond James accounts, but it may be wise to review your company retirement plan allocation as well. We are happy to provide insights at no cost as needed.
9. Donor-Advised Funds: Front-Load Giving for Tax Efficiency
DAFs offer unique tax advantages for charitable giving and may be appropriate for those looking to maximize donations in a single tax year.
Next steps: Let us know if you’re considering charitable giving at year end as part of a tax strategy.
10. Annual Gift Exclusion: Give Tax-Free Up to $19,000 Per Recipient
You can gift up to $19,000 per recipient in 2025 without triggering gift tax. This may be a great way to transfer wealth and support loved ones.
Next steps: Reach out with questions around the gifting rules and strategies for more information
Final Thoughts
We will consider each of these strategies in our financial planning, but please reach out proactively if you feel that these situations apply to you or if you’d like to learn more about any of the ideas mentioned above. As always, thanks for the continued trust and confidence.
Any opinions are those of Raanes and Oliver Capital Advisors and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.
Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.
The investments mentioned may not be suitable for all investors. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct.
Past performance may not be indicative of future results. Investing involves risk, and you may incur a profit or loss regardless of the strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.