Your Financial Year-End To-Do List

By Betsy Cunagin, CFP®, CRPC®

Wealth Manager, Principal

November 1, 2022

It’s the end of the year, and your to-do list is a mile long. The last thing on your mind is your finances. Still, they deserve a good look before the close of the year. While we cannot help you with the cooking, cleaning and gift buying, we can help with your financial year-end to-do list.

Charitable giving

Year-end is a popular time for charitable giving. The type of gift (appreciated stock or cash from a brokerage account, contributions of appreciated stock to a donor-advised fund, a cash gift from an IRA, etc.) should be carefully considered in the context of your overall tax situation. Tax law changes from the end of 2017 add to the importance of a well-thought-out annual charitable giving plan. For example, the standard deduction for married-filing-jointly (MFJ) is $25,900 in 2022 compared to $12,700 in 2017. For a single taxpayer, the standard deduction rose to $12,950 in 2022 versus $6,350 in 2017, so if available Schedule A deductions do not exceed the higher standard amount, charitable gifts are effectively not tax deductible.


  • Qualified charitable distribution (QCD): If you’re over 70.5, charitable gifts made directly from an IRA reduce taxable IRA distributions dollar for dollar. A charitable gift from an IRA is called a QCD. These types of gifts were made a permanent part of the tax code in early 2016. Another benefit of the QCD is the possibility of reducing Medicare Part B and D premiums, which are determined by modified adjusted gross income (MAGI). Calculate MAGI by adding adjusted gross income (AGI) and tax-exempt interest. This year, there are five tiers of MAGI that determine Medicare Parts B and D premiums. A QCD reduces MAGI, so charitable gifts made through an IRA could lower income enough to drop into a lower MAGI tier, thereby reducing Medicare B and D premiums.
  • Donor-advised funds (DAF): Grouping several years of charitable giving into one year (often called front-loading) allows gifts to be itemized along with other available Schedule A deductions. Appreciated stock that is over-weighted in a taxable portfolio can be reduced by gifting shares to a DAF. Using appreciated stock for charitable giving is tax efficient since you avoid capital gains tax on the appreciation. In subsequent years after the DAF is funded, gifts are made from the Physical Environment (e.g. Home) Friends and Family Significant Other / Romance Personal Growth and Learning Fun, Leisure and Recreation Career Money Health Example DAF rather than from a brokerage account. Structuring a charitable giving plan to incorporate a DAF allows you to time contributions to achieve the greatest tax benefit while maintaining the same level of annual gifting.


Retirement plan contributions

Don’t forget your retirement plan! You have options, depending upon the type of plan you have.


  • 401(k)/403(b)/defined contribution plans: If the contribution amount was lowered at any point during the year, revisit to ensure contributions are sufficient to receive the maximum company match. The limit this year for employee contributions is $20,500. If you’re over age 50, a step-up of an additional $6,500 is available. We advise clients to maximize contributions to a retirement plan to the extent cash flow allows. These contributions are typically pretax, serving to lower taxable income during working years. Contributions also compound more quickly than a similarly invested taxable portfolio.
  • IRA contributions: The IRA contribution limit is $6,000. If you’re 50 or older this year, a catch-up contribution of an additional $1,000 is available for a total limit of $7,000. While the annual contribution limit is the same for all IRAs, the tax treatment isn’t. Speak to your advisor before making an IRA contribution to ensure the most tax-efficient approach, which can change from year to year. For example, if your AGI is larger than $204,000 (married filing jointly) or $129,000 (single), then a direct contribution to a Roth IRA may be reduced or prohibited. If you’ve contributed to a Roth in the past, revisit any changes this year that may push your income over the threshold for a direct contribution.


Capital gain/loss harvesting

Modera strives to manage portfolios in a tax efficient manner. Portfolio managers harvest losses to offset capital gains realized throughout the year. If you have outside assets that have realized gains this year, reach out to your advisor to discuss possible additional year-end loss harvesting.


Health savings account (HSA)

Contributions to an HSA are pretax if made through payroll deductions. If contributions are made with after-tax dollars, an adjustment-to-income deduction is taken, which serves to lower adjusted gross income. In addition, withdrawals are not taxed if used for qualifying medical expenses. And don’t forget — HSA account balances roll over from year to year, unlike their flexible spending account (FSA) counterpart. Given the tax-preferred treatment of HSAs, we recommend maximizing annual contributions if an HSA is available with your medical plan. For 2022, contributions can be made up to $3,650 for individual coverage and $7,300 for family coverage. For those over 55, an additional $1,000 can be added as a catch-up to these limits.


Annual exclusion gifts

Gifts up to $16,000 can be made to an unlimited number of individuals this year. These annual gifts do not count toward the applicable lifetime gift-tax exclusion amount, which is why they’re often called annual exclusion gifts. Gifts made each year can reduce a taxable estate over time. All future growth on these gifts is outside of the taxable estate.


529 contributions

Consider additional savings to your children’s 529 plans at year-end. Parent-owned 529 plans can also receive contributions from grandparents.


Medicare Part D review

Changes can be made to an existing plan during open enrollment, which runs from October 15 to December 7. If you’ve experienced an increase in your monthly drug costs, we recommend reviewing your Part D coverage here: Formularies (drugs covered by a plan) may change from year to year. A review and comparison with other plans could uncover substantial savings.


Overwhelmed? We’re happy to help with your financial year-end to-do list. Give your advisor a call. Let us make sure you tackle any items on the list that apply to your unique situation.

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