--- title: Year-End Investment Planning Checklist for 2013 description: Review year-end planning strategies and tips. Consult a financial advisor and/or tax advisor before considering any adjustments. --- [![Assembly Wealth](https://www.letsassemble.com/hs-fs/hubfs/Assembly/logos/Assembly-Wealth-Logo-Orange-500px.png?width=300&height=70&name=Assembly-Wealth-Logo-Orange-500px.png "Assembly Wealth")](https://www.letsassemble.com/) The Money Manager People TM [800-541-7774](tel:+18005417774) [![RESEARCH MONEY MANAGERS](https://no-cache.hubspot.com/cta/default/10700/7ecbcb66-3fbb-41e3-b219-c24fb3c769c5.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/7ecbcb66-3fbb-41e3-b219-c24fb3c769c5) [![Client Center](https://no-cache.hubspot.com/cta/default/10700/8691dcb4-caa3-42c2-a810-77b59f461fd2.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/8691dcb4-caa3-42c2-a810-77b59f461fd2) [Home](https://www.letsassemble.com/) WrapManager's Wealth Management Blog When life changes, we can help you thoughtfully respond. [< Back to read another post](https://www.letsassemble.com/wealth-management-blog) # Year-End Investment Planning Checklist for 2013 Posted by [ Michael J. O'Connor | CWS®, Vice President Investments](https://www.letsassemble.com/wealth-management-blog/author/michael-j-oconnor) November 6, 2013 - [Tweet](https://twitter.com/share) 2013 is shaping up to be a strong overall year for the equity markets, and has hopefully been a positive year for many readers’ investment plans as well. As the year draws to a close, it’s time to review a few year-end planning strategies and tips. This should serve as a basic guide to investors to review their tax situations and investment plans before year end. Our suggestions may not apply to all investors, so it’s important to consult a financial advisor and/or tax advisor before considering any adjustments. ### Tax Planning Strategies to Consider ### Offset Capital Gains Using a Tax-Loss Selling Strategy Investors are able to offset capital gains with capital losses. If capital losses exceed capital gains in 2013, the excess can be used to reduce taxable income, such as wages, up to an annual limit of $3,000 ($1,500 if married but filing separately). If the total net capital loss is more than the yearly limit ($3,000), taxpayers can carry over the unused portion to the next year.1 Note: The effective long-term capital gains rate for 2013 is 15% for people earning less than $400,000 (single) or $450,000 (married). For those earning more than those amounts, the long-term capital gains rate is 20%.2 *Tax-Loss Selling Strategy and the Wash-Sale Rule* The wash-sale rule applies to tax-loss selling. If an investor sells a security at a loss and buys the same or “substantially identical” security within 30 calendar days before or after the sale, the loss is typically disallowed for current income tax purposes. A financial advisor should monitor this for you, and should be able to explain methods for replacing the sold security within the applicable wash sale period, so as to maintain equity exposure (if that is something you want).3 ### Charitable Giving to Reduce Taxable Income Charitable giving is an option for those looking to reduce taxable income, since donations or gifts made to a “qualified organization” can be tax-deductible. Qualified organizations include nonprofit groups that are religious, charitable, educational, scientific, literary in purpose, or that work to prevent cruelty to children or animals. You can typically donate cash, property, stocks, or other assets to have it qualify as a tax-deductible gift. Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. If you want to see if your charitable organization of choice qualifies for a tax deduction, you can check here: [www.irs.gov/charities](http://www.irs.gov/Charities-%26-Non-Profits).4 ### Gifting Assets to Reduce Taxable Income For 2013, taxpayers can make a tax-free gift of up to $14,000 per year to as many recipients as they’d like, without incurring federal gift tax. However, there are situations where gifting to a minor may incur a tax, so it’s important to consult a tax advisor for each gift. If a taxpayer and his/her spouse own property together, they are allowed to combine their allowable gift, meaning that for 2013 they can give $28,000 to each recipient and still qualify for the annual exclusion.5 For those seeking to make even larger gifts in a given year, gifting rules associated with 529 plans allow lump-sum deposits up to five times the annual exclusion, which this year is $70,000 for individuals or $140,000 for married couples. This allowance applies to each recipient. If a taxpayer decides to go this route, he or she must file a gift-tax return treating the gift as if it were spread over five years. During this five-year period, the taxpayer cannot make additional annual exclusion gifts to the beneficiary of the 529 plan.6 ### Making Contributions to Retirement Plans or IRAs Making contributions to a retirement plan such as a 401(k) or 403(b), or putting money into an IRA, can reduce your tax burden by reducing your taxable income. For 2013, the limits for 401(k) contributions are $17,500, with a catch-up contribution limit of $5,500 for those over 50 years of age. In other words, 50+ year old people can contribute up to $23,000 each year to a retirement plan and have that money deducted from their gross income. For traditional IRAs, the contribution limit for 2013 is $5,500, or $6,500 for those over the age of 50. However, certain limitations may apply to how someone can deduct those contributions. In general, deductions for contributions are phased out for individuals making between $59,000 and $69,000 if they are also covered by a workplace retirement plan. For married couples filing jointly and also covered by a retirement plan, the income phase-out range is $95,000 to $115,000. If a person is not covered by a workplace retirement plan, the IRA contribution is fully deductible.7 ### Using a Roth IRA Conversion as a Means to Reduce Future Taxes The general idea here is that a person converts some or all of an IRA into a Roth IRA—doing so means paying taxes on that money now, so as to be able to distribute that money later (after a five year waiting period) tax-free. Roth IRA conversions are available to anyone regardless of income or marital status. If a person thinks they may be in a higher tax bracket in the future, this maneuver might make sense. A person’s financial and tax situation will likely determine whether or not this is a good tactic, so it is important to consult a financial advisor before going forward with a Roth IRA Conversion.8 ### Important Year-End Investment Planning Reminders ### Required Minimum Distributions (RMD) For those over the age of 70 ½, it’s important to remember the required minimum distribution one must make from an IRA or retirement plan. A financial advisor or a custodian (the company that holds your assets) should be able to provide the required distribution amount,9 as well as facilitate the distribution (provide paperwork, sell securities to raise cash, etc…). This process may take several days, so it’s important not to wait until the last few days of the year to address it. For investors who have RMDs but don’t necessarily need the cash, it is possible to fulfill RMDs by transferring shares of stock from an IRA or a retirement account into a taxable or non-retirement account. The value of the stock or transferred asset at time of distribution from the IRA will count towards the RMD.10 A person may also elect to transfer cash or shares of stock to a qualified charity, in which case charitable giving rules may apply.11 Note: If you turn 70 ½ in 2013, you have until April 1, 2014 to take your first RMD. After that, the December 31 of each year deadline applies.9 ### Review Your Investment Plan The end of the year is a perfect time for investors to review their investment plans to ensure they’re on track to meet long-term goals. (If you don’t have an investment plan, contact your financial advisor to create one, or **[get started here](https://www.letsassemble.com/free-personalized-investment-plan)**). Reviewing an investment plan means assessing the performance of your money manager(s), reviewing your goals and objectives for the assets, making sure the plan is on track to meet these goals and needs, evaluating asset allocations, and so on. Any changes to the market outlook or your goals should trigger a review of your investment plan, and potentially the need for investment changes as well. ### Some other items to consider in reviewing your investment plan: - Update beneficiaries for each account, if necessary. - Explore the possibility of consolidating investment accounts, to make overall asset allocation more transparent and perhaps reduce fees and costs. - Consider shifting asset allocation based on changes in market outlook or changes to goals. - Consider cash flow needs for the upcoming year and whether there might be additional assets to invest as a result. - Include spouse or family members in the discussion with a financial advisor, so everyone is on the same page and understands the long-term plan. ### WrapManager as a Resource for Year-End Questions Our firm is here to help clients and other investors address year-end investment planning needs. If there is a question about any of the topics covered above, or if you would like to review or create an investment plan for your family, please contact us at 1-800-541-7774. [![Like What You've Read? 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