5 questions you should be asking as we approach year's end / by Eric Biddle

 by Eric Biddle, Financial Planner

by Eric Biddle, Financial Planner

We've been busy getting in touch with many of our clients as we approach the end of 2015.  If you are not a client of Fisher Wealth Management, here are some things you might want to be considering as the year comes to a close.

  1. Should I convert a Traditional IRA to a Roth IRA?  You will need to weigh whether or not the tax ramifications for this tax year will be outweighed by the opportunity for long-term, tax-free growth.  Some of our clients who earn above the income threshold for contributing to a Roth IRA are using a "backdoor" strategy to save in a Roth IRA.  Our clients that are using this strategy need to convert their Traditional IRA's to their Roth IRA's each year around this time.
  2. Should I take capital losses in my investment account to decrease my tax liability?  If 2015 has been a good year for you and you want to post some losses to decrease your taxes, you can sell off some of your investments that have had losses in order to reduce your tax liability.  You are limited to $3,000 in losses each year.
  3. Is my overall plan on track?  Our Financial Planning clients all receive annual reviews.  We spread those reviews throughout the year to fall near the month the client established the initial plan.  I've heard it said that a financial plan is outdated the moment it has been written.  This certainly does not negate the importance of the process for planning, but it does highlight the importance of reviewing it.  Take this month to review your plan to make sure you are inching closer to your goals.
  4. Can I save anything else?  For many, this is the time of year that bonuses are received.  Often times these bonuses disappear without much thought.  Though you have until April to contribute to your IRA's, this still might be a good time to look at the contribution limits and save a little toward retirement.  Likewise, consider whether or not you can make an extra contribution to your 401(k) or make an extra premium payment to a cash value life insurance policy (just be sure you do not create a MEC).
  5. Do I need to take an RMD?  With the exception of the first year in which you turn 70 1/2, you must take your Required Minimum Distribution by December 31st. (In the first year, you must take it by April 1st of the following year.)  There are steep penalties if you do not take your RMD on time, so it is always a good idea to review this before the year ends.  If you have a beneficiary IRA, you also might be subject to taking an RMD.