2019 Year-End Checklist

The start of the holiday season also marks the beginning of year-end planning at JNBA. Here are a few key planning items to consider prior to the end of 2019.

  • 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 all 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 considering selling appreciated securities should do so by the end of 2019 to pay 0% in long-term capital gains tax. Keep in mind, this would still count as income and may impact specific deductions and tax credits as well as state income taxes (if applicable), 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 2019, workers can contribute up to $19,000 into their employer-sponsored retirement plan (401(k), 403(b), and 457), and those over age 50 can contribute up to $25,000. 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. For those with a supplemental 457 Plan you may be eligible to double the contribution limits noted above if you have a 401(k) or 403(b) in conjunction with your 457, so be sure to know the details of your overall plan design.
  • Special 403(b) and 457 Plan Catch-up Contributions. In addition to the age 50 catch-up contributions mentioned above, there are a couple of special catch-up contributions that are not well known for some 403(b) and 457 plans. Certain 403(b) participants with 15 or more years of service may be able to make an additional $3,000 contribution, however it may be dependent on prior contributions to the plan. Governmental 457 Plans have a provision that may allow you to double the elective deferral (from $19,000 to $38,000) if you are within your last three years of employment before retirement. There are certain restrictions to these additional catch-up provisions, and it is important to work with your employer and tax professional to validate eligibility.
  • Maximize Tax Bracket. Work with your tax professional to review your 2019 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), especially those who are in the 10% or 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 income.
  • 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 2019 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 newer Minnesota 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/dependent care 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).
  • Tax Withholding Adjustments. Whether you are retired and withholding taxes from retirement income or assets, working and withholding from wages, paying quarterly estimates or perhaps a combination, year-end is a great time to double check those withholding figures to ensure you are on track to meet your tax obligations. With all the changes in tax reform last year, it is estimated that only one in three people who previously itemized deductions (tax year 2017 and before) are still able to do so given the higher standard deduction. Odds are, if you were under withheld last year, you will likely be under withheld this year all else being equal if you did not make any adjustments. If you fall into that camp, you may consider paying in to try to avoid any penalties. Make sure adjustments carry over into 2020 so you don’t find yourself in the same predicament moving forward.

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


PLEASE NOTE: JNBA is neither an attorney nor accountant, and no portion of the above should be construed as legal or accounting advice. All legal and accounting issues should be addressed with the legal and accounting professionals of your choosing.

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.

Please see important disclosures information at www.jnba.com/disclosure