Year-End Tax Planning Checklist for Railroaders

Greetings, everyone, and welcome to the latest installment of the Highball Advisors Railroad Retirement whiteboard. I'm John McNamara from Highball Advisors, and today our focus is on taxes. As of this recording in November and early December, I'll be highlighting crucial actions to consider before the year concludes. It's imperative to address these matters before the year-end deadline, as once the year concludes, there's no turning back. Let's delve into the checklist of seven key items.

First on the list for our railroad retirees is the completion of Required Minimum Distributions (RMDs). These are mandatory withdrawals from your tax-deferred accounts, required by the IRS. The age at which you need to take these distributions varies, typically around 72, 73, or 75, depending on your circumstances. Be mindful that failing to fulfill RMDs incurs a substantial 25% penalty on the unwithdrawn amount.

Moving on, we have the analysis of Roth conversions. This involves transferring money from tax-deferred accounts, such as 401(k)s and IRAs, to Roth accounts. Especially if you've retired and find yourself in a lower tax bracket, consider executing Roth conversions before the tax rates potentially increase after 2025.

The third point emphasizes the importance of tax loss harvesting and tax gain harvesting. It's an opportune time to offset any losses against gains, and if you have excess losses, you can carry them forward up to $3,000 each year.

Next on the checklist is the completion of charitable giving. Explore options such as Qualified Charitable Deductions (QCDs) and Donor Advised Funds (DAFs) to optimize your giving strategy while potentially gaining tax advantages.

Reviewing contributions to your tax-advantaged accounts comes next. While IRAs allow contributions until April 15th, other accounts like HSAs and 401(k)s require contributions to be completed by the end of the year.

Point six underscores the significance of reviewing your tax withholding and estimating taxes. It's crucial to ensure that you're not underpaying taxes and potentially incurring penalties. Consider adjusting your withholdings or making estimated tax payments based on your current financial situation.

Lastly, for those engaging in gifting, be aware of the $17,000 gifting limit to family members without triggering taxes.

In conclusion, this checklist serves as a guide to address vital financial matters before the year concludes. If you have any questions or need further assistance, don't hesitate to reach out. Tax planning is a critical component of our checklist, and it's essential to act before the year-end deadline. Schedule a Railroad Retirement meeting for a comprehensive discussion on these topics. Don't forget to subscribe to our channel for the latest updates. Your support is greatly appreciated. Until next time, stay safe, stay on track, and take care. Goodbye, everyone.

Get Free Railroad Retirement Assessment

Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.