Welcome. You’re listening to the FinTrust Capital Advisors From The Desk Of Podcast: our podcast about markets, life, and things financial. Today’s podcast about retirement plans features Donna Rasile, FinTrust’s Senior Vice President, Investment Advisor, with MK Cassidy, also with FinTrust Capital Advisors.

Cassidy: Hello and welcome to today’s episode of Fintrust Capital Advisors; From the Desk Of: our podcast about markets, life, and all things financial. My name is Cassidy Murphy. I’m a financial planner with Fintrust. And I’m joined today by Donna Raslie, Senior Vice President and one of our investment advisors. Today we’re going to talk about important financial planning items for year end and we’ll hopefully give you a few things to think about adding to your to-do list to ensure your financial affairs are in order as we head into 2023.

Donna: Great. Thank you, Cassidy. Yes, this is a subject we really feel is important as part of our holistic wealth management approach. We often talk about the importance of meaningful relationships that go beyond the numbers. And while most of us are pretty good at keeping an eye on our account balances, there are a lot of little things outside the numbers that can have a significant impact is not addressed. So, we’re here today to bring some of those little things to the forefront. And what I’d like to do is break it down into a few different levels of priorities. One, things that should be done by the end of the year. Two, things that are a good idea to take care of before the end of the year. And three, things you should put on your calendar for 2023. So, let’s get started.

Cassidy: Yes, so let’s start with the things that really need to get done by the end of the year, because quite a few things come to mind where there are actual consequences if they are not taken care of by December 31. The first and maybe the most obvious is required minimum distributions or RMDs from any IRA or 401 account. Now, if you turn 72 or older this year, there’s a minimum amount that the IRS says you have to take out of your IRA and pay taxes on each year. If you just turned 72 in 2022, you technically have until April 1 of next year. But for most people, it’s a good idea to go ahead and get that first one out of the way. If you fail to take an RMD, the IRS will tax you an extra 50% as a penalty. So please do not forget. RMDs are also required for certain retirement accounts that you may have inherited from another family member. And the Secure Act of 2019 changed quite a few of the rules around those requirements. There was a widely held understanding that the so-called “Ten Year Rule” for inherited IRAs did not require annual RMDs for beneficiaries. But the IRS released new guidance this year that contradicts that in some circumstances. So, there are many beneficiaries who didn’t take RMDs for the past two years but will have to take them starting in 2023. It’s important to look at your income and tax productions over the next ten years when deciding on the best strategy for drawing down this inherited account.

Donna: Excellent information, Cassidy. Thanks. Another must do that I discussed with many of my clients is Roth Conversions and Backdoor Roth Contributions. While these strategies are unique to every client, it is helpful to be aware of this option. If you are in a lower-than-normal tax bracket or you anticipate your future marginal tax bracket will be higher than the one you’re in now, Roth conversions can be an excellent planning tool. You do this by paying taxes on a pre-tax IRA or 401 now in exchange for being able to withdraw them later tax free. This is something that we’ve done and have been doing in response to the 2022 market performance, because you will have a lower tax bill when you convert an already depressed account balance, and then all that growth when the account eventually comes back ends up being tax-free. If you want the converted funds to count towards your income for 2022, this is another item that has to be taken care of by the end of the year.

Cassidy: And Donna, speaking of tax minimization strategies, I know we’ve also been talking to a lot of clients about tax-loss harvesting. Do you want to give just a brief overview of what that entails?

Donna: Sure, I’d be happy to. Tax loss harvesting is another strategy that we use to maximize tax efficiencies in our clients’ portfolios. And it’s when you sell a security that is currently at a loss, you lock in the capital loss for tax purposes, and then you either purchase a similar investment or use the proceeds to buy back the same investment after 30 days. The primary reason is that you can carry forward those losses into future years to offset future capital gains. If you don’t have any capital gains to offset, you can also offset up to $3,000 in ordinary income each year. Of course, we always recommend you consulting your tax adviser when considering any tax related strategies.

Cassidy: Yes, and those carry forwards can really come in handy, and they help you to at least get something beneficial out of a down year. Now, for our last must do for year end, I’m going to suggest one of my favorite topics charitable giving. If you want to itemize and take a charitable deduction for 2022, those donations need to be received by the charitable entity by December 30th to be safe. There are dozens of ways to give, but one of our preferred strategies is to bunch several years’ worth of donations into a single year and use that amount to fund a donor advised fund that allows you to take a larger itemized deduction upfront and still use the generous standard deduction in future years. You can then make grants from the donor advised fund to any qualified charity at your discretion. Some other great strategies to consider include qualified charitable distributions from an IRA if you’re over 70 and a half or donations of highly appreciated securities from a taxable account.

Donna: These are all wonderful ideas. And yes, there’s so much you can do in the area of charitable giving. I hope so far, your listeners have found that these tips have been helpful in just getting ready to plan before the end of the year and of course, going into 2023. However, let’s go ahead and move on to things that are a good idea to do, but not necessarily have deadlines. So, Cassidy, what would you suggest?

Cassidy: So, these are really more of housekeeping type items, but one thing I think everyone should do at least once a year is review the beneficiaries on all of their accounts. 401k’s, IRA’s life insurance policies, annuities, transfer on death assignments for any taxable accounts, you always want to make sure that these are up to date. Don’t be the person who passes away and inadvertently leaves their life insurance policy to an ex-spouse or forgets to add a young child as a beneficiary on their 401k. And along the same lines, it’s also a great time to double check your estate plans. So, if you have a will in place, healthcare directives, power of attorney make sure that they’re all still set up to your wishes. Trust documents should also be reviewed periodically, since the legislation governing different types of financial accounts is always changing. I mean, for example, it used to be a great idea to use a trust as the beneficiary of an IRA or 401K. But now the rules are much stricter, and a trust must be more carefully constructed to avoid tax pitfalls.

Donna: Yes, it’s so important to stay on top of these things. Life changes can vary from year to year. Be proactive and use year-end as a great checkpoint to review your budget for the past year and start making projections and goals for the new year. For starters, what does your income look like for the upcoming year? How about your expenses? Do you anticipate any large expenses on the horizon, like college tuition, a home purchase, or a big vacation? Start thinking about your cash flow for the new year and look for opportunities to put things in place to provide a level of financial confidence. 2022 presented many challenges, therefore, look for opportunities to position 2023 accordingly. This is a great time to reassess and also to revisit your financial plan. See if there are any adjustments that need to be made to your financial goals, savings, assets, or expenses. We recommend everyone update their financial plan at least annually so that we can identify potential obstacles far in advance.

Cassidy: Definitely. And as you said, so much can change in a year, so it’s really critical to stay on top of all of these things. And I’m obviously biased but having a solid financial plan in place that you can review regularly also provides a lot of peace of mind when the market environment gets a little shaky. Now, with all of that said, I want to wrap up with just a couple of reminders as we look at the beginning of 2023. First, thanks to inflation, retirement plan contribution limits have jumped pretty significantly for next year. You can now defer up to $22,500 to your employer retirement plan, or an even $30,000 if you’re 50 or older. IRA limits have also gone up slightly and are now $6,500 for under $7, 500 for 50 and over. The family HSA limit is now $7,750. So, make sure you’re maximizing your contribution to any or all of these vehicles to the extent they are able to. You technically have until April 1 to make a prior year IRA contribution for 2022. So, you can always wait until you have a little bit better view of your tax picture to determine whether or not you’re eligible for a Roth contribution or deductible IRA contributions.

Donna: Perfect. Thank you for that. I think this has been a great discussion and hopefully we’ve provided listeners with a few things to think about as we head into the new year. As always, if you have any questions or concerns, please feel free to reach out and we would be happy to speak with you. We at FinTrust Capital Advisors wish you and your family a joyous holiday season and all the best in the New year. Thank you all for listening.

Disclaimer: Securities offered through FinTrust Brokerage Services, LLC (Member FINRA/SIPC) and Investment Advisory Services offered through FinTrust Capital Advisors, LLC.  Insurance services offered through FinTrust Insurance and Benefits, Inc. Any views expressed in this message are those of the individual sender, except where the message states otherwise and the sender is authorized to state them to be the views of any such entity. Trade instructions may not be accepted via email. This material does not constitute an offer to sell, solicitation of an offer to buy, recommendation to buy or representation as the suitability or appropriateness of any security, financial product or instrument, unless explicitly stated as such in the transcript or audio of the podcast. Past performance is not necessarily indicative of future returns. Performance numbers have not necessarily been independently reviewed or audited and therefore we make no representation as to its accuracy. Any reference to the terms of any contracts should be treated as preliminary only and subject to our formal written confirmation. This information should not be construed as legal, regulatory, tax, or accounting advice. This message (and any attached materials) is for the sole use of the intended recipient or recipients and may contain information that is privileged, confidential and exempt from disclosure under applicable law. Any review, dissemination, distribution or duplication of this communication is strictly prohibited.

Disclaimer: Securities offered through FinTrust Brokerage Services, LLC (Member FINRA/SIPC) and Investment Advisory Services offered through FinTrust Capital Advisors, LLC.  Insurance services offered through FinTrust Insurance and Benefits, Inc. Any views expressed in this message are those of the individual sender, except where the message states otherwise and the sender is authorized to state them to be the views of any such entity. Trade instructions may not be accepted via email. This material does not constitute an offer to sell, solicitation of an offer to buy, recommendation to buy or representation as the suitability or appropriateness of any security, financial product or instrument, unless explicitly stated as such in the transcript or audio of the podcast. Past performance is not necessarily indicative of future returns. Performance numbers have not necessarily been independently reviewed or audited and therefore we make no representation as to its accuracy. Any reference to the terms of any contracts should be treated as preliminary only and subject to our formal written confirmation. This information should not be construed as legal, regulatory, tax, or accounting advice. This message (and any attached materials) is for the sole use of the intended recipient or recipients and may contain information that is privileged, confidential and exempt from disclosure under applicable law. Any review, dissemination, distribution or duplication of this communication is strictly prohibited.