As the end of 2024 approaches, now may be a great time to review your current financial status and start developing goals for the new year. Before this year is over, we recommend that you take advantage of the annual limits, exclusions, and planning strategies available in 2024. We will continue to monitor any legislative changes that may impact these recommendations.
Not every item below will apply to your situation, but this checklist highlights a few items you may want to consider:
| GROW | |
| · RMDs generally must be distributed by 12/31/2024 for account holders age 73 and above and for some of those who have inherited retirement assets. | |
| · Maximize retirement plan contributions. | |
| · Convert IRA balances to Roth, if applicable, in lower income years. | |
| LIVE | |
| · Discuss remaining 2024 and future 2025 cash needs going into year end. Evaluate withdrawal strategy and flexibility of timing (if applicable). | |
| PROTECT | |
| · Communicate Corporate Transparancy Act filing with attorney, if applicable, for some entities, trusts, and businesses. | |
| · Use FSA Funds if necessary (some plans allow for either a grace period or rollover of up to $640). | |
| · Medicare Open Enrollment: October 15, 2024 to December 7, 2024. | |
| · Incur medical expenses before year end if your health insurance deductible has been met for 2024. | |
| · Maximize Health Savings Account (HSA) contributions before April 15, 2025. | |
| · Notify insurance carriers of any change of address or bank institution so that premium notices are received, and payments occur without causing a lapse in coverage. | |
| · Review and update beneficiary designations in the event of a change in a family situation, such as the birth of a child, death, or divorce. | |
| · Provide homeowners insurance premiums to CPA for rental properties. | |
| GIVE | |
| · The 2024 annual gift exclusion is $18,000 per person ($36,000 for a married couple). | |
| · Consider transferring assets out of estate to capture the currently high $13.61 million per person estate exemption. | |
| · The annual gift exclusion can be used to make contributions to a 529 Plan. Consider accelerating gifts (up to five years). | |
| · Submit all qualified expenses to a 529 plan for 2024. | |
| · Withdraw 529 funds for K-12 expenses (up to $10,000 as determined by state). | |
| · Withdraw up to $10,000 from 529 plans for student loan repayment (lifetime limit). | |
| · Utilize “charitable bunching” strategy to donate two or more years’ worth of charitable contributions in one tax year through a Donor Advised Fund (DAF). | |
| · Determine best assets to gift (ex: appreciated stock or cash). | |
| · Qualified Charitable Distribution (QCD) from IRA directly to charity (up to $105,000 for individuals 70.5+). | |
| · Review your tax return for charitable contribution carryover that could lapse if not applied. | |
| · Explore Qualified Business Income Deduction for business owners. | |
Retirement Plans
Retirement plans require (though there are some exceptions) that individuals begin taking Required Minimum Distributions (RMDs) starting at age 73. We recommend that you discuss the timing and tax implications of your RMDs with your CPA to ensure tax estimates are sufficient and appropriate. RMDs must be distributed by December 31, 2024 (unless it is your first year for an RMD, during which you can delay until April 1, 2025, but would be required to take two in one year). Up to $105,000 of your RMD can be gifted directly to a qualified charity starting at age 70½ , which is also a strategy to reduce income.
Explore Roth Conversions (converting your IRA to a Roth IRA) in lower-income years, if possible. You can find information on Roth conversions here. We recommend you discuss tax implications with your CPA.
Maximize annual contributions to retirement plans, if possible and applicable (limits listed below).
Retirement Plan Contribution Limits and Deadlines
| 401(k), Roth 401(k), 403(b), and 457 Plans | Max contributions of $23,000 (as well as additional $7,500 catch-up for those 50+) must be made by December 31, 2024 |
| IRAs | Maximum contribution of $7,000 (as well as additional $1,000 catch-up for those 50+) must be made by April 15, 2025 |
| Roth IRA | Maximum after-tax contributions of $7,000 (as well as additional $1,000 catch-up for those 50+) must be made by April 15, 2025 |
| SEP IRA/Solo 401(k) | Maximum contributions (lesser of $69,000 or 25% compensation) can be made until the tax filing date (including the extended filing date) |
| SIMPLE IRA | Maximum contributions of $16,000 (as well as additional $3,500 catch-up for those 50+) must be made by December 31, 2024 |
Healthcare and Medicare Open Enrollment
Unlike HSA funds, funds in your FSA typically do not roll over from year to year, depending on the employer plan. You may be able to elect to roll over $640 or have a “grace period” to use funds. The deadline to use these funds is December 31, 2024. If you elect to use the grace period, the deadline is March 15, 2025.
- Annual HSA contribution limit increased from $7,750 to $8,300 for family plans ($4,150 for single). There is a catch-up contribution of $1,000 available for those 55+.
- Annual FSA contribution limit increased from $3,050 to $3,200.
Health Savings Accounts (HSAs) can be funded through April 15, 2025 for the 2024 year. Maxing out contributions in these tax-efficient accounts is often recommended.
Medicare open enrollment for 2025 runs from October 15 to December 7, 2024. Before and during the open enrollment period, it is recommended that you take a fresh look at your employer’s coverage options and enroll if needed. For more information, see our article here.
Annual Gift Exclusion
The annual gift tax exclusion for 2024 is $18,000 ($36,000 for a married couple), an increase of $1,000 from the prior year. Remember: there is no limit on the total amount you can gift per year; however, there is a limit on how much you can gift to any single individual per year without triggering a gift tax. Gifts must be completed by year-end to qualify for this year’s exclusion.
Charitable Gifting
Given the standard deduction amounts, combining two or three years’ worth of charitable contributions into one tax year (known as charitable bunching) using a Donor Advised Fund (DAF) may be beneficial. If you are on the cusp of being over the standard deduction, you might consider accelerating your gifts for future years.
Another way to avoid realizing capital gains taxes is to gift appreciated assets held more than a year to charity. In many cases, this may be more tax-efficient than gifting cash. Gifting appreciated assets in conjunction with a donor-advised fund may be a beneficial strategy for many families.
Qualified Charitable Distributions (QCDs) of up to $105,000 can be made from IRAs directly to charities for individuals who are 70½ or older. You may want to discuss with your advisor and CPA if this might be a good option for you.
We recommend reviewing your tax return for any charitable contribution carryover. Carryover contributions must be applied within 5 years of the charitable gift, at which point the carryover is lost.
Important Custodian/ Asset Transfer Information
| Stock/Cash gifts directly to charities | Must have signed transfer memo to SignatureFD by December 15, 2024 |
| Mutual Fund transfers | Must have signed transfer memo to SignatureFD by October 30, 2024 |
| Stock/Cash gifts made to a Donor Advised Fund (DAF), then granted out to charitable organizations | Must have signed transfer memo to SignatureFD by October 30, 2024 |
| Stock/Cash gifts between accounts at the same Custodian | Must have signed transfer memo to SignatureFD by December 15, 2024 |
Note: The above are suggested deadlines from our Custodians, as they allow time for the paperwork to be processed. However, some transfers may be expedited by logging into your Custodian website and requesting them there. SignatureFD can help you navigate your options based on the necessary timeframe.
Saving For Education (529 plans)
A special provision allows you to accelerate your annual gifts and use up to five years of your annual gift exclusion in one year ($90,000 per person or $180,000 per couple). With this strategy, you must file a gift tax return and make sure not to contribute again within those five years.
Beginning in 2018, some states started allowing distributions from a 529 Plan of up to $10,000 per year for primary and secondary education. Previously, distributions could only be used for “qualified higher education expenses.” Be sure to verify with your state plan provider.
The SECURE Act allows 529 Plan beneficiaries to use up to $10,000 (lifetime limit) towards student loan debt for themselves or a sibling.
Other Planning Considerations
Corporate Transparency Act (CTA): Under direction from the Financial Crimes Enforcement Network (FinCEN), “reporting companies” such as corporations, LLCs, certain trusts, etc., must file a Beneficial Ownership Information (BOI) report. FinCEN’s goal here is to prevent the exploitation of anonymously owned companies for illegal purposes. Filing deadlines are below based on reporting company formation:
| Formed before January 1, 2024 | Must file by January 1, 2025 |
| Formed from January 1 to December 31, 2024 | Must file within 90 days of formation |
| Formed on or after January 1, 2025 | Must file within 30 days of formation |
If you are unsure if your reporting company meets the requirements to warrant filing, consult with your business or estate attorney. For more information, see our article here.
Health Insurance Deductible: If you have met your health insurance plan deductible, consider incurring any additional medical expenses prior to year-end, at which point your deductible will reset.
Other Insurance-Related Reminders: If you have had any changes in address or bank institution, notify insurance carriers of the change so that premium notices are received and auto payments continue to avoid a lapse in coverage. Additionally, remember to review beneficiary designations in the event of a change in your family situation, such as the birth of a child, death, or divorce. Lastly, remember to provide CPAs with homeowners premiums for rental properties.
High Estate Exemption Environment Planning Tactics: With the estate exemption at $13.61 million per person, now may be a good time to think about wealth transfer planning. The current estate exemption will return to around $7 million per person in 2026. We continually watch for possible changes to these tax and estate laws that may impact these strategies, so talk with your estate attorney, CPA, and advisor to see which tactics you may want to consider for your situation.
Explore Qualified Business Income (QBI) Deduction: The business owner deduction (Section 199A passed with TCJA) for passthrough income except for special service businesses (i.e., accountants, consultants, doctors, etc.).
In summary, several planning tactics can be considered as we approach the end of the year that can be completed now. The financial advisors at SignatureFD continue to monitor potential laws or changes related to recent tax legislation as the remainder of the year progresses. We will send clients any additions to these recommendations as they present themselves. Please reach out to your advisor with any questions specific to your circumstances.
