Thrifty Thinking: Discussions to have with Your Tax Advisor

Each year, tax season is one of the times that people around the nation dread the most. Having to file the return, paying in, and the stress of it all can leave people feeling the pinch. In fact, most people don’t take action about their tax bill until it’s too late to do anything about it. The good news is that if you are proactive and take action ahead of time, you can potentially save a lot of money and stress later on.

“With the end of the year fast approaching, we are proactively analyzing each client’s portfolio and tax situation to make sure we coordinate with a client’s tax advisor to help avoid any unnecessary taxes prior to year-end,” explains Samantha Fraelich-Rohe, CFP ® from IntegriGEN Wealth Management. “It’s better to work on these matters now rather than wait until deadlines pass and fees add up since it’s usually too late anyway.”

Here are 5 tax discussions to have with your advisor now:

1) Capital Gain Distributions -Due to 2015 profit taking by investment managers, some investments are expected to post higher than average capital gains distributions to their investors. If these investments are held in “non-retirement” accounts, the distributions are taxable in 2015. Now may be a good time to focus on year-end tax planning as it relates to your investment portfolio.

2) Harvest Tax Losses, Where Appropriate - If you have capital gains this year, you typically will pay anywhere from 15%-23.8% for long-term gains (assets you owned longer than 1 year) and your ordinary income tax rate for short-term gains (assets owned for less than 12 months). If you have any assets with losses that you haven’t captured yet, it may make sense to harvest some of these losses since you can offset the gains dollar-for-dollar.

3) Roth Conversions -If you have suffered a lower than normal taxable income year or you have an ordinary income loss, you may want to consider a Roth conversion for a certain dollar amount. Or, if you have an IRA that declined significantly in value, you may want to consider converting that IRA to a Roth at a discount depending on how long you plan to hold that asset. Traditional IRA account owners should consider the tax ramifications since the converted amount is generally subject to income taxation.

4) Maximize your Retirement Plan Contributions. If you are self-employed without any employees, there are inexpensive retirement plans you may be able to set up that would allow you to contribute up to $53,000 if you’re under 50 yrs old and $59,000 if you’re over 50. These contributions would be tax deductible but plans need to be established and partially funded by 12/31.

5) Be Sure to Take Your Required Minimum Distribution - If you are 70 or older this year, you will need to take a required minimum distribution from applicable retirement plans before 12/31. (If you are turning 70 this year, you can defer the distribution until 2016, but it must be taken by April 1st). If you don’t take the minimum amount before 12/31, the IRS levies a severe penalty (50 percent on the amount you were required to take).

“Any registered financial professional can sell you investments, but this is where advisors who focus on planning really add value to their client relationships. If your advisor isn’t already doing this for you, it doesn’t hurt to ask if they can,” adds Brad Glickman, CFP ®, from IntegriGEN Wealth Management. “It’s important to speak up and be proactive, as it will save you a lot of money in the long run.”

About IntegriGEN Wealth Management

Brad Glickman, CFP® and Samantha Fraelich-Rohe, CFP ® are Managing Partners at IntegriGEN Wealth Management in Rockville, MD. The firm’s name, IntegriGen, embodies integrity, which they value; together with the clients they serve over multiple generations. While many people tell their advisors they want to “make a lot of money” or “be able to retire someday” – Brad & Samantha dig deeper to help provide confidence in their clients’ overall financial position. They are associated with the largest independent broker-dealer in the country,*LPL Financial. They greatly value that independence, because they’re able to honor their own values and principles by always putting the interests of their clients first and foremost. To learn more about IntegriGEN Wealth Management, please visit www.integrigenwealth.com.

1 1. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

As reported by Financial Planning magazine, June 1996-2015, based on total revenue.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through Maryland Financial Group, a registered investment advisor. Maryland Financial Group and IntegriGen Wealth Management are separate entities from LPL Financial