Financial planning: Your year-end ‘to do’ list


"The potential GOP tax bill makes it difficult to know exactly how the landscape will look in 2018... nevertheless, there are some items you can take care of before the end of the year that can impact your 2017 taxes and overall financial plan," write Jeff Witz, CFP, and David Zemon.


What can I do proactively for my financial plan as we head into year end?

We are in a uniquely difficult position as we head toward the end of the year. Normally, this is the perfect time to wrap up final financial and tax-planning items. However, the potential GOP tax bill makes it difficult to know exactly how the landscape will look in 2018. If and when a new tax bill is finalized, we will be sure to provide an update on how changes may impact you. Nevertheless, there are some items you can take care of before the end of the year that can impact your 2017 taxes and overall financial plan.

Do you own stocks and other marketable securities outside of your retirement accounts that have lost money? If so, consider selling those losing investments to lower your 2017 tax bill. This strategy allows you to deduct the resulting capital losses against this year's capital gains. If your losses exceed your gains, you will have a net capital loss.

You can deduct up to $3,000 of net capital loss (or $1,500 if you are married and file separately) against ordinary income, including your salary, self-employment income, alimony, and interest income. Any excess net capital loss is carried forward to future years and puts you in position for tax savings in 2018 and beyond.

Also by Jeff Witz, CFP, and David Zemon: How to choose between Roth, traditional accounts

Suppose you are fortunate enough to have the reverse situation: You own stocks and other marketable securities (outside of your retirement accounts) that have substantially increased in value since they were acquired. Taxpayers in the 10% or 15% income tax brackets can sell the appreciated shares and take advantage of the 0% federal income tax bracket available on long-term capital gains. Giving qualified dividend-paying stocks to family members eligible for the 0% rate is another tax-smart idea. But before making a gift, consider any gift tax consequences.

The annual gift tax exclusion is $14,000 in 2017 ($28,000 for married couples). You can gift this amount to any number of individuals without having to pay gift tax or have it count against your lifetime gift and estate tax exemption. Looking to 2018, for the first time since 2012, the IRS is increasing the gift tax exclusion amount to $15,000 ($30,000 for married couples).

Charitable donations can be one of the most powerful tax-savings tools because you're in complete control of when and how much you give. No floor applies, and annual deduction limits are high (20%, 30%, or 50% of your adjusted gross income, depending on what you're giving and whether a public charity or a private foundation is the recipient).

If you have appreciated stock or mutual fund shares that you've owned for more than a year, consider donating them instead of cash. You can generally claim a charitable deduction for the full market value at the time of the donation and avoid any capital gains tax hit.

If you own stocks worth less than you paid, don't donate them to a charity. Instead, sell the stock and give the cash proceeds to a charity. That way, you can generally deduct the full amount of the cash donation while keeping the tax-saving capital loss for yourself.

Next: Revising beneficiaries


If there has been a major change in your personal life, such as a recent marriage or divorce, the birth or adoption of a new child, or a death in the family, you may need to revise the beneficiaries on your retirement accounts and life insurance policies. You may also need to update your will and power of attorney documents. Life changes can be stressful, and it's very common for these financial planning opportunities to be overlooked. But failure to update financial plans and legal documents can lead to unintended consequences later on, either when you die or if you become legally incapacitated and need someone else to make certain decisions on your behalf.

Watch - Prescription for financial health: Tips for early-stage physicians

These are just a handful of financial issues to consider as we approach year end. Your financial and legal advisers can run through a more comprehensive checklist of planning options based on your personal circumstances.


I just learned about the expense ratios associated with the mutual funds held in my individual retirement account. What is an acceptable expense ratio, and how do I know if I’m paying too much?

There is no standard for expense ratios. If you shop around, you will notice they can be as low as 0.05% or as high as over 2.00%. It is up to each investor to determine if those fees fit the return being generated by the fund. If performance is exceptional, it may be worth the higher expense ratio. However, most of the time, you can find passive index funds that perform equal to or better than the more expensive actively managed funds once the difference in fee is factored into the total return. So, unless you have the time to research actively managed funds and their strengths and weaknesses, it may be better to stick with low-cost passive index funds.

More from Urology Times:

How do active and passive fund management differ?

How to choose the best retirement savings plan

Do I really need a long-term disability policy?


Send your questions about estate planning, retirement, and investing to Jeff Witz, CFP, and David Zemon c/o Urology Times, at Questions of general interest will be chosen for publication. The information in this column is designed to be authoritative. The publisher is not engaged in rendering legal, investment, or tax advice.

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