12/30/2022
Before 2022 ends consider these financial, retirement and tax actions you may need to review. Note, we are not accountants or financial planners but wanted to share this useful information.
1 Review Your Investments to Harvest Losses This Year
If you have investments in a taxable account, you may consider selling off any losers to offset any gains you have made. Selling losses can help reduce your tax liability for the year, if you have any capital gains, and then you can carry forward investment losses to offset capital gains in the future.
Once the year 2022 ends, you can no longer harvest losses to offset against 2022 capital gains.
2 Contribute to a Retirement Account
If you have not yet reached your retirement account contribution limits for the year, you might consider contributing to a retirement account.
Here are the contribution limits for 2022:
401(k), 403(b): $20,500
Traditional and Roth IRAs: $6,000
SIMPLE IRA: $14,000
3 Required minimum distributions (RMD) and qualified charitable distributions (QCD)
If you have a traditional IRA and you (or your parents) are age 73 or older, you (or they) need to take an RMD for 2022 by the end of the year.
You must take RMDs or make a qualified charitable distribution by December 31, 2022, or you’ll pay the 50% penalty. Don’t miss this one.
4 Inherited IRA Required Minimum Distributions
If you inherited an IRA prior to the SECURE Act or if you are an eligible designated beneficiary who inherited in 2020 or 2021, you will need to take an RMD for this year. In addition, if you inherited an IRA this year, and the family member who left you that IRA did not take a required minimum distribution, you’ll need to take a year of death RMD this year, before the end of the year.
5 ROTH IRA Conversion
If you are considering converting to a Roth IRA, now may be a good time to do so, as tax rates are currently low and markets have come down from their previous highs. You will need to act quickly, as the deadline for converting for 2022 is December 31.
