December 2023 | Question of the Month

By Admin Prepare

December 11, 2023


Over the last several weeks, you have mentioned the different deadlines coming up for the end of the year to minimize taxes, avoid penalties, and maximize retirement.  Can you please summarize these moves again?  Since we are now really close to the end of the year, I want to make sure I don’t miss anything. Thank you.”  Keith

Hello, Keith.  Yes, we have discussed this a lot over the last several weeks and talked about all the different deadlines you need to know about and understand.  Failure to meet these deadlines can result in penalties, extra taxes, and lost opportunity costs.  Below is a summary list of some of the retirement planning moves that have year-end deadlines.

Required Minimum Distributions – RMDs are due for anyone that has a pre-taxed retirement account and who is age 73 or older in 2023.  If you are in this situation, you must take a withdrawal from those accounts and claim that income on your tax return.  If you don’t take your RMD, or take enough, there are steep penalties.

Roth Conversions – Roth conversions are a tremendous tax-advantage move to make in order to be able to take advantage of the current tax code for this year and to become more tax efficient.  However, unlike Roth contributions – Roth conversions have to be done by the end of the year to count for 2023. 

Tax-Loss Harvesting – This is a way to sell some investments in an after-tax brokerage account that has losses, in an effort to help offset the ones that posted gains, to help minimize capital gains taxes for the year.  In order to count for 2023, this must be done by the end of the year.

Charitable Contributions – If you want to donate money to charity and have it count for 2023, you must do it by the end of the year. 

Contributions to Employer Retirement Savings Accounts – Contributions for 2023 to traditional IRAs and Roth IRAs are open until April 15th of next year.  However, if you have a 401(k), 403(b), or other type of employer-sponsored retirement savings plan, those contributions must be made by the end of the year.

529 College Savings Plans – Many parents and grandparents like to contribute to these accounts for their children and grandchildren.  If you want to contribute to these plans, you must do it by the end of the year in order for it to count for 2023.

Gifting – Gifting is a popular move done by many people each year.  Under the gifting rules, in order for it to count for 2023, all gifting must be done by the end of the year. 

To get your retirement planning questions answered or to sign up for a retirement course, visit the Prepare Institute website (www.theprepareinstitute.org) to contact us and/or find a retirement course or class near you. 

Content is for educational and informational purposes only.  It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. You should contact your retirement and tax professional before utilizing any of the information in this article.