2020 Year-End Planning Checklist

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We are now a few weeks from officially being in fall. This is the time of year to begin tax planning for your 2020 taxes. The mistake most people make is they do not plan for taxes until after the new year and by then there is little to no planning that can be done. Below is a helpful checklist with important deadlines to be aware of to help you with year-end tax planning:

October 1st

Establish a SIMPLE IRA for 2020 – Although not as common anymore if you are a business owner establishing a new SIMPLE IRA it must be done by October 1st.

October 15th

Establish and fund a SEP-IRA for 2019 – If you are a business owner who filed an extension for your business the deadline to establish or fund a SEP-IRA for 2019 is October 15th.

Withdraw or Recharacterize 2019 IRA Contributions Without Penalty – Any excessive contributions to an IRA or Roth IRA can be reversed by October 15th. After this deadline excess contributions have a 6% penalty charged against them. Keep in mind this deadline does not apply to Roth Conversions since they are no longer eligible for recharacterization.

Make 2019 Employer Contributions to a SIMPLE IRA – If you are a business owner who filed an extension for your business the deadline to fund the SIMPLE IRA for 2019 is October 15th.

October 31st

Provide Trust Beneficiary Documentation to Custodian or Administrator – If an IRA, Roth IRA, or employer-sponsored plan owner died in 2019 and has a trust named as the beneficiary then the deadline to get this paperwork to the custodian or administrator is October 31st.

December 30th

Utilize Coronavirus Related Distributions – The CARES Act allows for distributions up to $100,000 from IRAs or employer-sponsored plans (i.e. 401(k) or 403(b)). These distributions waive the 10% early distribution penalty and the tax implications can be spread over three years and the deadline for them is December 30th.

December 31st

Required Minimum Distributions (RMDs) are waived for 2020 – Another part of the CARES Act was that RMDs were waived for 2020. So this deadline nothing needs to be done but it does create some interesting planning opportunities so talk with us today.

Make a Qualified Charitable Distribution (QCD) – The deadline to make up to $100,000 charitable contribution from your tax-deferred account is December 31st. If you are charitably inclined you will want to speak with us or and initiate these by December 15th to ensure they are completed by year-end.

Roth Conversions for 2020 – With RMDs not being required for 2020, Roth conversions are an attractive option for many this year. Consult with us and your tax adviser before completing a conversion and they must be done by December 31st.

Complete Net Unrealized Appreciation (NUA) Transactions – NUA is when you convert employer stock in your 401k or retirement plan with your employer into a taxable account. There are potentially huge tax savings for individuals using this strategy. The transaction must be done by December 31st but should be started by November 1st to ensure plenty of time to complete the transaction by year-end. Please talk with us or your tax advisor to learn more.

Max out HSA Contributions – For 2020 the maximum amount you can contribute for self-only is $3,550 or $7,100 for families. There is an additional $1,000 catch up contribution allowed for individuals that are 55 or older.

Max Out Employer-Sponsored Plan – For 2020 if you want to maximize contributions to your employer retirement plans the maximum contribution is $19,500 for those under the age of 50. For individuals that are 50 or older can contribute up to $26,000 for 2020

Personal Gifts of $15,000 – You can gift up to $15,000 per individual annually to loved ones without tax implications.

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