Planning to Do Before Year’s End



By Ben Dunbar
12/03/2018

Believe it or not, the end of the year is here. Thanksgiving has passed and the rest of the winter holidays are right around the corner. Holidays can be a bit a busy, but don’t forget to do all the appropriate year end planning. Don’t start 2019 missing out on what you could have done in 2018.

1. Consider maxing out your 401k. If you are an employee, that last day to contribute to 401k for 2018 is December 31. The maximum employee contribution for 2018 is $18,500 ($24,500 if over 50). You can either make a traditional 401k contribution (take a deduction now) or a Roth 401k contribution (no deduction now, however, contribution grows tax free). If you had a late start this year, or changed jobs, you can increase the percentage the company withholds temporarily for your next 1-2 paychecks.

2. Tax loss harvest. As of the end of November, many asset classes are down on the year. If you have some investments, consider realizing the losses. This can be especially beneficial if you have taken large gains on the year from your portfolio or company stock. If you don’t have any gains, you can write off up to $3,000 of your losses. The rest can be carried forward to write off against future gains.

3. Consider charitable contribution if you itemize: If you donate to qualified charities, you can receive a tax deduction for 2018 as long as you itemize deductions. IMPORTANT NOTE: Because of the increased standard deduction with the 2017 Tax Cuts and Jobs Act. It is very possible that you may not be itemizing your deductions this year even if you itemized in the past. Meet with your CPA well before year end to understand your specific position. There are other options such as a donor advised fund if you don’t know what charity you want to donate to right now. Make sure you speak with your investment professional and CPA about your options.

4. Required Minimum Distributions: Do you have Traditional or Rollover IRAs and you are over 70.5? Have you opened an Inherited IRA? Make sure you take your distribution on time or you will incur a hefty penalty!

5. Utilize Gift Tax Exclusions: You can gift $15,000 ($30,000 if married and elect gift splitting) to as many people as you want without incurring any gift tax.

6. Don’t make drastic changes to your allocation: The investment world has been challenging to navigate this year. Often times, people look to make drastic changes during market volatility. If you are uncomfortable with the volatility and want to be more conservative, look to slowly make adjustments to avoid missing a quick and major bounce back in the market. Always keep the long-term perspective in mind.

Depending on your situation, some, none or all of these may apply. As always, we recommend speaking to an investment and tax professional. If you have any questions regarding your specific situation feel free to give us a call.

Securities offered through LPL Financial, Member FINRA(http://www.finra.org/)/SIPC (https://www.sipc.org/).

Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Gerber Kawasaki and Gerber Kawasaki Wealth and Investment Management are separate entities from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

Gerber Kawasaki, 2716 Ocean Park Blvd. #2022 Santa Monica, CA 90405. Contact us at (310) 441-9393