ODCM Monthly Newsletter - December

Jared Troutman |

Our recent monthly newsletters have been an in depth review of the economy and markets.  It has been somewhat difficult (okay, very difficult) to read through and did not offer much that you could use in daily life.  With that in mind we are going to revamp our monthly newsletter to cover topics of interest that have a direct impact on our clients lives, at times of the year when action can be taken.

'Tis the Season!

It is that time of year again, time to decorate the tree and eat endless amounts of holiday cookies.  It also happens to be a great time to verify you have taken your Required Minimum Distribution (if applicable), gotten all your charitable giving done, maxed out your retirement savings and looked at your 2018 tax situation.  Oh, also open enrollment at work and decisions on healthcare insurance. Oh what fun!  These are subjects that we are here to help with and I’ll go into a little more detail on each.

The penalty for not taking your RMD is 50% of the amount that was supposed to have been withdrawn.  Ouch!  If you have IRA accounts with ODCM and you are over age 70 ½ we will let you know how much should be taken out and verify that you do so on time.  What we don’t know is: do you have tax deferred accounts outside of ODCM?  There are a number of options on how to take the RMD; you can aggregate the balances and take it out of on IRA, you can gift to charity directly from your IRA or some combination of both.  The important thing is to make sure you take the correct amount.

Following up on the charitable contribution thread, gifting from an IRA is a great strategy now.  With the change in tax laws, itemizing deductions will be less beneficial than years past, gifting from the IRA continues to be very tax efficient.  We are starting to use donor advised funds more; the strategy is to “group” your itemized deductions in a tax year for the biggest tax advantage.  What that means is making a larger charitable contribution into a donor advised fund (and taking the itemized deduction in the year you do it) where you get to control when the funds are distributed and to whom.  Using appreciated stock to do this makes the strategy even better.

On to year-end tax review…  This year will be significantly different for most people due to tax reform.  If you have a small business or complicated tax situation we suggest visiting with your CPA while there is still time.  Check your 401k contributions for the year to make sure you deferred what you wanted.  Look at your projected tax rates for this year and following years.  If you are in a low tax bracket this year it could be a good time to do a Roth conversion.

Depending on your circumstances open enrollment is either closed or will be shortly.  Always make time for an annual review of your healthcare benefits and costs.  It seems that plans change on a yearly basis; drugs get added and deleted from coverage and doctor networks seem to shrink.  You want to avoid unpleasant surprises if at all possible.

I’ve just scratched the surface here, for questions or more detail on these or any other subject, don’t hesitate to contact us!

We hope you all have a wonderful Holiday Season!

The Team at Old Dominion Capital Management