As year-end quickly approaches, we want to remind you of some important planning items to the extent we have not already discussed these together.
Managing Income/Expenses
Evaluate your likely taxable income for this year and next year and decide whether to accelerate the realization of income or deductions in the coming weeks (where possible).
Annual Gifting/529 Plan Contributions
Under the annual gift-tax exclusion, you can gift up to $18,000 in 2024 to any person (a married couple can gift $36,000) with no gift/estate tax implications. Gifts can be made as direct gifts, gifts to trusts, and contributions to 529 plans. Consistently taking advantage of annual gifting can have significant long-term benefits.
- Please let us know if you would like to discuss if/how you should make such gifts this year.
Major Gifting
The lifetime federal estate and gift tax exemption is slated to increase from $13.61 million to $13.99 million in 2025.
- While this limit is currently scheduled to sunset at the end of 2025 and revert to a lower level, the results of the recent elections make it increasingly likely that this lifetime exclusion will remain at/near current levels. Let us know if you are considering making any additional significant gifts before year end so we can discuss any potential implications of doing so.
Charitable Contributions to Donor Advised Fund
Make sure that any donations either made directly to individual charities or to Donor Advised Funds are completed before the end of the year.
- When possible, using appreciated securities and/or making Qualified Charitable Distributions from an IRA for such gifts can have significant tax advantages.
- Depending on your total tax deductions this year, a strategy of “bunching” charitable contributions may make sense.
Retirement Plan Contributions
For those that participate in a 401(k) or similar retirement plan, make sure to contribute the maximum allowable (or affordable) amount for the year. (The current contribution limit is $23,000 for those under 50 years old and $30,500 for those older than 50.)
- For those of you that own closely-held businesses, the contribution limits may depend on the plan type and/or economic performance of the business entity in 2024.
- People aged 60-63 may be eligible for increased contributions of up to $34,750 to their traditional retirement plans in 2025.
Beneficial Ownership Reporting
Per our prior message, beneficial owners of any non-exempt entity must be reported prior to January 1, 2025. More information on the reporting requirements, including the types of entities for which reporting is required, can be found here.
Cash Management
While interest rates remain relatively high, it’s possible that the Federal Reserve continues to cut rates in 2025. It’s important to have a strategy for managing excess cash above your “emergency fund”.
- Please let us know if you are currently holding such excess cash so we can discuss an appropriate strategy.
