Fourth-Quarter To-Dos to Keep on Your Radar

If you have an employer-sponsored retirement plan:

Review your paystub or plan statement to confirm you are on schedule to contribute what you intended for the year. There is time left in the year to increase your contribution from salary deferral if you are not adding the maximum, which for most plans is $18,000 for 2017. If you are age 50 or older, you may contribute an additional $6,000 as a catch-up contribution. If you changed jobs during the year, make sure you coordinate the benefits from multiple employers, and don’t over contribute. See this article about what you and your advisor can learn from your pay stub.

If you are self-employed:

If you have thought about using an individual 401(k) plan for retirement savings, the plan needs to be open by the calendar year-end, even if you don’t actually fund it until 2018. SEP IRAs have more flexibility, and can be opened next year for the 2017 tax year. If you are not sure if either of these options makes sense for you, ask your Heritage advisor soon.

If you are gifting to family:

The annual limit for gift-giving without potential gift tax consequences is $14,000 from one individual to another. The amount is doubled to $28,000 for married couples giving to a single person. Medical and college costs paid directly to the provider do not count against the exclusion. If you intend to gift using annual exclusions, the gift needs to be completed by year-end.

If you are giving to charity:

Before you send cash, ask your advisor if there is a more tax-efficient way to give. In many cases, donating appreciated investments may provide greater overall benefits. If you give frequently or want to better manage your record-keeping, a Donor Advised Fund may be a good option to consider. Talk about any plans early so your advisor can consult with you and complete any paperwork before the busy end-of-year.

If you expect significant changes to your income this year, or next year:

Please let your advisor know if your level of income is unusually high or low this year compared to the past, or if you expect that it may differ substantially in 2018. If the result is higher taxable income, we may be able to find strategies to reduce negative tax consequences or spread the liability out over time. In addition, low-income years can provide planning opportunities such as IRA to Roth conversions.

If you pay quarterly estimated taxes:

It is not a deadline before year-end, but the January estimated tax due date can sneak up unexpectedly. Mark your 2018 calendar now as a reminder.

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