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Ask Dana! A Column Where Personal Finance and Life Intersect

Ask Dana! A Column Where Personal Finance and Life Intersect

Upcoming year-end deadlines approaching! Consider if these important tax and financial planning tips can make a difference in your financial life:

  1. 2022 Income Tax Review. Now is the time to assess what your expected 2022 taxable income will be. Depending on your personal circumstances, consider tax planning strategies that can reduce taxable income now to reduce your tax liability, 
    or… 
    Increase your taxable income now if you may be looking at higher taxes in the future. You could consider Roth conversions, funding pre-tax or Roth retirement plans, creative profit-sharing moves for business owners, tax bracket management, gifting, and so much more.
  2. Investment Gains/Loss Review. If you are an investor with taxable, non-retirement accounts, you may have experienced tremendous growth in your investments over the last several years, but 2022 has certainly been a tough year for certain investments. Now is the time for assessing realized capital gains and tax loss harvesting. Even though we are mindful of this for our client’s investment accounts all year long, the 4th quarter is the most wonderful time of the year…to manage the gains and losses in taxable investment accounts. Use this time to see how you have done with your investments and figure out if you want to sell to take any gains or losses in 2022.
  3. Are you saving enough through your employer retirement plans? Take a moment now to check your paystub details and see how much you have saved this year. December 31 is the last day for elective contributions through your employer plans like 401(k)s or 403(b)s. For 2022, the maximum contributions are typically $20,500 if you are under 50, with $6500 catch up if over 50 (total of $27,000).
  4. Are you a small business owner without a retirement plan? If the answer is yes, there may be still time to set up certain plan types. There are also new rules in the state of Connecticut that may require you to have a plan. Ask your personal advisor or tax professional what the best plan is for your business, and if you don’t have an advisor, give our team a shout and we will be your guide!
  5. Investment Allocation Review Time! Are you positioned for the current market risks that we are seeing today? With inflation, higher interest rates, recessionary concerns, international risks, political concerns and more, there are certainly many things to consider when positioning a portfolio for the future. Take this as a reminder to review your allocation and see if you are where you want to be, or simply review your accounts with a qualified advisor.
  6. Feeling charitable? For those who make larger contributions, consider the following for the most bang for the buck: Qualified Charitable Deductions from IRAs (for those over 72), donating appreciated stock from taxable accounts, or clustering annual donations with donor-advised funds. This is often of interest for higher-income clients facing large tax bills.
  7. How about your estate plan? At TrinityPoint, we ask our clients: “What would you like to have happen with your money if something happened to you yesterday?” It is so important to make sure beneficiary designations and estate documents are up to date and correct. Beneficiary payout rules have changed for inherited retirement accounts, and there may be possible higher tax rates down the road. It is advisable for higher net worth individuals to review their plans as soon as possible.
  8. What makes you happiest? As one of our partners, Michael Smiley, says in his year-end planning with clients, “What makes you happiest? Set a goal to do more of that—whatever it is—over the coming weeks, months, and year ahead!”

Please pause and take a moment to consider the important reminders above. I think you will find yourself feeling grateful you did. And please remember, seeking outside advice from professionals when you need it for tax, legal, or financial advice can make the overall process easier and less stressful for you. If you don’t know where to turn, don’t hesitate to contact us!

Dana R. Mascalo, CFP®, RLP®, AAMS®, C(k)P®, is a Managing Partner with TrinityPoint Wealth, an independent SEC Registered Investment Advisory firm in Milford, CT and Charlotte, NC. Dana advises high net worth clients with complex needs and is sought after by individuals, families, business owners and executives all over CT and the United States. Acting as their personal CFO, Dana looks at a client’s entire financial life with a visionary lens, advising on investment portfolios, retirement planning, stock options, life transitions, exit planning for business owners, customized advanced cash-flow planning and multi-generational wealth transfer strategies.

Disclosure: This material is provided by TrinityPoint Wealth for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, however, TrinityPoint Wealth cannot guarantee the accuracy or completeness of such information. TrinityPoint Wealth does not provide tax or legal advice.