Your December Financial To-Do List


Stay on track each month as we offer suggestions for improving your financial life.

Be Generous

If giving financial gifts to loved ones is on your to-do list, you can be exceptionally generous without making your estate susceptible to the gift tax. For 2018, each individual can gift up to $15,000 per person per year without having to file a gift-tax return, and all but ultrawealthy, ultragenerous people will never pay gift tax during or after their lifetimes. Year end is also a good time to squeak in charitable contributions that may lower your tax bill; with the new higher standard deduction amounts that kick in in 2018, taxpayers may find it helpful to bunch their itemized deductions into a single year while claiming the standard deduction the next. Investors who are subject to required minimum distributions can direct their RMDs to charity, thereby reducing their taxable income for the year; donor-advised funds can also be a great option for the time-pressed.

Conduct a Year-End Portfolio Review

There is no telling how the market—and in turn your investments—will perform in 2019, but year end is a good time to check up on your portfolio. If you own investments in your taxable account that have lost value, selling to generate a tax loss is a way to find a silver lining. The 0% long-term capital gains rate is also in effect for 2018, so investors whose income puts them under the thresholds may be able to engage in tax-gain harvesting. And investors at all income levels can improve their portfolios by repositioning within their taxsheltered accounts, where they will pay no taxes following changes as long as the money
stays inside the account.

Take Your Required Minimum Distributions

If you are post age 70 1/2, you know the drill: December 31 is your deadline for taking required minimum distributions from your tax-deferred accounts, such as IRAs and 401(ks. Affluent retirees love to hate their RMDs, and it is often suggested that they trim their distributions from holdings they wanted to prune anyway—positions that have grown too large, for example, or funds and stocks that have outlived their usefulness. If you are in the enviable position of not needing your RMDs to live on, consider steering a portion of the distribution, up to $100,000, to charity via the qualified charitable distribution maneuver.

Important Date

December 31 is not just New Year’s Eve, it is also your deadline for a number of financial to-do’s, such as 401(k) contributions. Investors who are required to take minimum distributions from traditional IRAs and 401(k)s will need to do so by December 31, too