It’s hard to believe the first quarter of 2021 is nearly over. We have lived through one of the most unprecedented years in history which has required adjustments from all of us. During this past year it has been easy to lose focus on many areas of “life” and feel behind. The good news is that this year is looking to provide a partial closure to the pandemic through the success and deployment of the vaccines across the country. The speed and distribution from the vaccines is certainly something we can all celebrate together!
As we move into the 2nd quarter of 2021 we wanted to take a moment to remind you of some financial planning items that might help you make some personal and family decisions this year.
- Taking your distribution early rather than later in the year to take advantage of current market levels.
- If you feel you do not need your RMD, you may want to consider utilizing your IRA for charitable gifting without paying the tax.
- The IRS will still allow the gift tax exclusion of $15,000 per individual per year. There is discussion from Washington to reduce this in the future so this is a good year to take advantage of gifting if you are so inclined.
- Consider utilizing a Roth Conversion, or partial Roth Conversion of your current IRA. Growth is tax-deferred and qualified withdrawals are tax-free for Roth assets.*
- Consider funding 529 plans for your children or grandchildren. 529 Plans are a great way to plan for college savings and allow for tax deferred growth as long as dollars are used for education expenses. 529 plans can be used for in-state and out-of-state schools as well as private and public institutions.**
- Do you have an individual account in your name alone? Consider adding a Transfer on Death or “TOD” designation to the account to avoid probate.
- After the past year’s market rise, be sure to consider donations of appreciated stock as opposed to using cash. This enables you to gift away the shares and have no capital gains tax obligation. Then you could use the cash to buy back shares and reset the cost basis if you want to continue to hold the position.