In Archived

With Thanksgiving only a week away and the end of the year quickly approaching, you may be thinking about shopping and spending time with your family.  However, this is the time of year the team at Crestwood is focused on year-end planning.  Highlighted below are issues we are actively discussing with our clients as the year draws to a close.  If you have any questions or would like to explore any of these issues further, please do not hesitate to reach out to us.
Year-End Tax Planning

We actively manage your realized gains and losses throughout the year, but please let us know if there are any special considerations of which we should be aware – like significant gains/losses outside of your investment account.

Charitable Gifting

Now is the time to consider your plans for charitable gifts intended to be made prior to December 31st.  If you intend to use appreciated stock for donations, please let us know as soon as possible so we may advise you in advance of the year-end rush or “best efforts” custodial deadlines.

Sometimes, it makes sense to maximize charitable deduction benefits in a high-earning year by utilizing a donor-advised fund, like the Fidelity Charitable Gift Fund or the Schwab Charitable Fund.

Also please keep in mind that the IRS reinstated for 2013 Qualified Charitable Distributions (QCD) from IRAs.  A QCD is an otherwise taxable distribution from an IRA owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity. This income is excluded from gross income up to $100,000 made for a year, and a QCD can be used to satisfy any IRA required minimum distributions (RMDs) for the year.

Employer Benefits – Retirement Plan Contributions & HSA Plans

It is worth it to do a double check and ensure that you have contributed the maximum amount to your employer-provided 401k or 403b plan.  In 2013, the limit for elective deferrals is $17,500 (plus another $5,500 “catch up” allowance if you are over age 50).  These limits remain the same for 2014.

As high deductible health insurance plans become more popular, make sure you take full advantage of the opportunity to fund a Health Savings Account (HSA) if one is offered through your employer.  These accounts are funded with pretax dollars, can be invested, and the funds come out tax-free for qualified medical expenses.  HSA funds can also be used to pay for long-term care policy premiums, COBRA coverage, health care coverage while unemployed, Medicare, or other health coverage once age 65 or older.  If you do not need the money for health related expenses the funds can be withdrawn after age 65 subject to ordinary income tax (similar to an IRA).

Consider Roth IRA conversion(s) if you are capable of paying the tax with outside assets.  You will pay taxes on a Roth conversion at today’s rates, but because there are no minimum required distributions after age 70 ½, so you can leave the funds to grow tax-free during your lifetime and potentially that of your heirs.  If you do need the money, all withdrawals are tax-free after age 59 ½.


Gifting on a tax-free basis may be a good option for reducing future gift and estate taxes.  The current IRS determined gift tax annual exclusion is $14,000 per recipient.  Payment of tuition and medical bills are not subject to the annual exclusion.  If you choose to pay tuition or medical bills as a method of gifting, be sure to send payments directly to the institution rather than the beneficiary.

As a reminder, there have been a number of changes to our tax laws this year for high income earners:

tax laws

Please let us know if you have any questions about how these considerations impact you.  We are always eager to speak with you.

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