Litman Gregory Senior Advisor and Principal Gretchen Hollstein, CFP® was recently quoted in Barron’s Here are 5 Tax Moves to Consider for an Unusual Year, which offered ideas to consider for year-end tax planning.
She describes some common planning strategies we utilize with clients, such as considering Roth IRA conversions. “We’ve been helping people who are in a relatively low tax bracket with [Roth] conversions,” Gretchen says. “The key is how much to convert—we suggest partial conversions, just enough to keep people in their income-tax bracket.”
Gretchen also responded to questions about managing IRA distributions in a unique tax year. The downside to leaving assets in the IRA is that next year’s distribution—and therefore, tax bill—may be significantly bigger. She explains that to address this “we’re helping clients use IRAs for charitable giving this year.” A so-called qualified charitable distribution rule allows gifts to be made directly from IRAs to a charity without tax consequence. “It doesn’t end up as an itemized deduction, but it reduces their IRA balance.”
The article further covers some additional strategies we often use to help clients incorporate charitable giving in their tax optimization plan, and family gift planning within their estate plans. Amidst the many unknowns of the year, she notes that “some planning is about hedging your bets.”
Our advisory team at Litman Gregory has been working through a variety of tax-sensitivity and optimization strategies with clients in recent year-end planning discussions, and many of these were also covered in our recent Year-End Planning Webinar. Please contact your advisor to discuss opportunities for your situation.
Read the full article by Barron’s.
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In a volatile environment like the one we find ourselves in today, and experienced just two years ago in 2020, we recognize that some investors feel as though they should make changes in their portfolios—even if just to take action.
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In this commentary, we highlight key developments in the global economy and financial markets. The biggest macro event was Russia’s brutal invasion of Ukraine. As is our job, our focus is on the economic and financial market impact of this event. Clearly, the human impact has been devastating and tragic, and our hearts and support are with the Ukrainian people.