As we approach the end of another year, it’s a good time to take a look at your financial situation. (I know, me saying that came as a total surprise…!) Not that there is a bad time to do this, but the end of the calendar year can bring certain challenges and opportunities. Let’s consider a few.
Capital Gains. If you have any capital gains for the year in your investment portfolio, they can generally be offset by taking capital losses. This means that if you’ve sold positions for gains, you can reduce your tax liability by selling some positions for losses by the end of the year. It is important to note that you didn’t necessarily need to sell anything to receive a capital gain for the year. If you own mutual funds, they may be distributing capital gains later this year. As mutual funds make changes in their portfolios, they may incur gains that are passed on to the investor. And, as we had a huge year in the market last year, your stock funds may have especially high capital gains distributions this year. These gains can also be offset by taking a capital loss by the end of the year.
Gifting. The IRS generally allows a gift exclusion amount that is not taxable under the gift tax laws. For 2014, this limit is $14,000. This exclusion applies to every person you give to. I.e. you can give $14,000 to each of your kids without incurring the gift tax. This exclusion is per calendar year, so you must do this by the end of the year for it to count towards 2014. Donations to charities also must be made by the end of the year to apply to 2014. Making charitable contributions before the end of the year may be tax deductible for 2014. So, what does this have to do with investing? It may make sense to gift or donate appreciated securities instead of cash. By doing this, you give the full value of the security, but don’t need to sell it and pay the capital gains tax.
Retirement Accounts. Specifically employer sponsored retirement accounts. If you have a 401k plan at work and want to reduce your taxable income, you may be able to increase your contribution limit for the rest of the year. This is especially important if your income makes it impossible to deduct contributions to traditional IRA’s. Also, your contribution limit to the 401k will be much higher than to a traditional IRA. For SIMPLE IRA plans, this time of the year is very important. SIMPLE IRA’s are retirement plans often offered by small businesses. Generally speaking, the election period for SIMPLE plans is November 2nd through December 31st. If your employer offers a SIMPLE plan and you are participating or eligible, but not participating, any changes must be made during this election period. Otherwise, you have to wait another year. As a reminder, 2014 contributions to a traditional or Roth IRA can be made up until April 15, 2015.
Rebalancing. An important aspect of investing is monitoring your account. This doesn’t mean watching it every day, but occasionally evaluating your portfolio to make sure it is still appropriate for your situation. This often means rebalancing your allocation. And, while this isn’t specific to the end of the year, it’s a good time to make sure you are ready for the new year in every way. For example, if you haven’t rebalanced for a while, you will want to make sure that your 60/40 (stock v. bond) portfolio hasn’t crept up to an 80/20 split. Also, if you’ve had any significant life changes such as marriage, divorce, babies, etc., you may need to re-evaluate your allocation.
These are just a few things to consider as we close the books on 2014. Also, as every situation is unique, please consult your financial advisor and/or tax advisor to see if these strategies apply to you. And as always, if you’re looking for a financial advisor, please feel free to contact Breanna Lowry at 206-361-5312 to set up an appointment with one of us at Verity Credit Union.
I hope you have a great Holiday Season!!!
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
Check the background of this investment professional on FINRA’s BrokerCheck.
A Financial Advisor registered through CUSO Financial Services, L.P., Gavin has 25 years of experience as an advisor in the Puget Sound area.
“I believe every client is unique and deserving of a personalized financial plan that will help them reach their individual financial goals. Before I make any recommendations, I like to get to know my clients. By asking the right questions, and developing an honest, trusting relationship, I can really get a sense of what’s going to work best for them.”
Gavin graduated from the University of Washington with a BA in Business Administration and started his financial career with US Bank in the Investment Department. Prior to joining Verity in 2006, he spent eight years with Piper Jaffray.
So what is Gavin’s vision for his dream retirement?
“My dream retirement would be absolutely worry free: financially, emotionally, and in every aspect of life. My finances would be in order so expenses for travel, luxuries, and gifts for the kids, grandkids, and great-grandkids would be taken care of. My kids would be financially sound, so I would be confident in their prosperity. This would give me the freedom to travel and play and do whatever it is I want to do.”
When Gavin’s not working, he enjoys spending time with friends and family, watching Husky football and taking weekend trips around the Northwest.
Gavin is registered to transact securities business in the states of AZ, CA, CO, FL, HI, ID, IL, KS, MN, NV, NY, OR, UT, VA and WA.
*Non-deposit investment products and services are offered through CUSO Financial Services, LP (“CUSO Financial”) (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CUSO Financial. Verity Credit Union has contracted with CUSO Financial to make non-deposit investment products and services available to credit union members. Atria Wealth Solutions, Inc. (“Atria”) is not a broker-dealer or Registered Investment Advisor and does not provide advice. CUSO Financial is a subsidiary of Atria.
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