Year-End Tax & Gifting Deadlines

The start of the holiday season also marks the beginning of year-end planning at JNBA. We have included below some key planning items to consider prior to the end of 2018.

  • Investment Portfolio Review. The end of the year is a great time to look at your investment and retirement accounts to better understand how they fit together. While taxes should not be the primary driver of your investment strategy, year-end is a good time for taxpayers in higher income tax brackets to look for losses to offset investment gains. Taxpayers in the 10% and 12% federal tax brackets already considering selling appreciated securities should do so by the end of 2018 to pay 0% in long-term capital gains tax. Keep in mind, this is still income and could potentially impact specific deductions and tax credits, and we recommend working with your tax professional to determine if this strategy is in line with your goals and objectives.
  • Retirement Plan Contributions. Contributions to your 401(k) or similar employer-based retirement plans are excluded from your taxable income (this does not include Roth IRA or Non-Deductible IRA contributions). In 2018, workers can contribute up to $18,500 into their employer-sponsored retirement plan (401(k), 403(b) and 457), and those over 50 can contribute up to $24,500. If you are not on track to maximize your contributions, at least up to your company match, consider directing extra dollars into your retirement plan prior to December 31.
  • Maximize Tax Bracket. Work with your tax professional to review your 2018 tax situation and determine whether you have an opportunity to accelerate your income through withdrawals from your IRA or other qualified accounts prior to the end of the year or convert IRA dollars to a Roth IRA. These strategies could maximize your current tax bracket and potentially lower your future required minimum distributions or tax burden. This strategy is generally recommended for those between the ages of 60-69 (prior to the age of required minimum distributions), who are in the 10% and 12% federal tax brackets or for those individuals who have a lot of money saved in qualified accounts. It is important to consult your tax professional to determine the impact this additional income may have on deductions and tax credits, as well as on Medicare premiums and the taxation of Social Security.
  • Year-End Giving. Determine the best way to make gifts to charitable organizations and family members before year-end. If you itemize your deductions and execute charitable contributions to a 501(c)(3) tax-exempt organization by December 31, your donations could be tax deductible. If you contribute $250 or more, you will need written acknowledgement of the gift from the organization. Also, if you plan to make a more significant gift, consider gifting appreciated securities that you’ve owned for more than one year (directly or through a Donor Advised Fund) or a Qualified Charitable Distribution from your IRA (for those individuals age 70 ½ or older) directly to charity instead of giving cash. If you plan to make a gift to family members before the end of the year, remember the annual gift tax exclusion amount for 2018 is $15,000 per person. If you are a Minnesota resident and make a contribution to a 529 plan for a child or grandchild, there is a new state tax credit or deduction available to you as well.
  • Employer Annual Benefits. Review the benefits provided by your employer to determine if there is opportunity to leverage these before the end of the year. This might include taking advantage of annual physicals covered by your health plan or leveraging estate planning resources that are provided to you. If you have a medical FSA it is important to review the balance in this account. Most plans will not roll the balance over to the next year (use it or lose it policy).

Because some of the above considerations involve tax information and may be unique to your situation, we also suggest contacting your tax professional. If you have any questions about these year end reminders, please do not hesitate to contact your JNBA advisory team.

Please see important disclosure information at

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors, Inc.