Earlier this year, we wrote about the tax planning opportunities presented from the SECURE Act 2.0. As we near the end of this year we wanted to highlight some of the timeless tax strategies that we focus on in our discussions with clients.
In our portfolio management, we regularly look for opportunities throughout the year to maximize after-tax portfolio returns beyond investment selection, allocation, and periodic rebalancing. As part of our strategic focus on tax sensitivity in managing investment strategies we utilize some of the following techniques in our client portfolios:
As always, we welcome the opportunity to discuss these planning topics with our clients and to coordinate with their tax advisors to determine the best techniques for each client’s individual tax situation. Please contact your Advisor for more information and to review your situation.
Note: As with all tax planning strategies, every person’s situation is different. We suggest consulting with your tax advisor before implementing any of these tax planning techniques.
In addition to the changes that became effective this year with the SECURE Act 2.0, several other tax related changes went into effect that may impact your tax planning situation. Here are a few key highlights for changes effective starting 2023 and the changes expected for 2024:
|401(k), and other employer-sponsored plan contribution limits||Annual contribution limit is $22,500, with those age 50 or older allowed to make an extra “catch-up” contribution of $7,500, for a total of $30,000.||Annual contribution limit will increase to $23,000, with those age 50 or older allowed to make an extra “catch-up” contribution of $7,500, for a total of $30,500.|
|IRA contribution limits||Traditional IRA and Roth IRA contribution limits (combined) is $6,500, and up to $7,500 with the catch-up for those age 50 or older.||Traditional IRA and Roth IRA contribution limits (combined) will increase to $7,000, and up to $8,000 with the catch-up for those age 50 or older.|
|Annual gift tax exclusion limit
(This is the amount that any individual can give to another individual without having to report the gift to the IRS as a taxable gift or require them use part of their lifetime gift and estate tax exemption amount.)
|The annual gift tax exclusion amount is $17,000.||The annual gift tax exclusion limit will increase to $18,000.|
|Estate and gift tax exemption limit
(Note: Current estate tax law states this exemption amount will “sunset” after 2025 and revert back to the 2016 limit of $5 million per person, indexed for inflation.)
|The federal estate and gift tax exemption amount is $12.92 million per person.||The federal estate and gift tax exemption amount is estimated to increase to $13.61 million per person.|
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It’s Beginning To Look A Lot Like Yearend Tax Planning Season
With just a few months left in the 2023 tax year, we wanted to highlight some timeless tax planning techniques. In this post we share some of the strategies that Litman Gregory Wealth Management considers as we help our clients optimize the tax-efficiency of their overall planning as well as our portfolio management on their behalf throughout the tax year.