2024 Year-End Planning Guide

As we approach the end of 2024, the financial planning committee at Atlantic Edge has put together our list of important reminders and top strategies designed specifically for our clients.

These strategies are aimed at helping our families maximize opportunities, minimize taxes, and continue building wealth for the long term. Our team is here to guide you through the process and ensure you’re well positioned to take advantage of options available to you.

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1. Roth Conversions

Consider converting some of your traditional IRA to a Roth IRA if you’ve had a lower-income year or expect higher tax rates in the future. You must complete the conversion by December 31.
 

• Does this apply to me?
  Yes, if your income is lower this year or you expect higher taxes in retirement.
   

• How this helps me:
  Roth IRAs offer tax-free growth, and you avoid future RMDs.
   

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2. Qualified Charitable Distributions (QCDs)

If you’re 70½ or older, you can donate up to $100,000 directly from your IRA to charity. This donation counts toward your RMD and reduces your taxable income. We recommend employing this strategy due to the increased standard deduction which renders reporting charitable contributions on your taxes ineffective. 
 

• Does this apply to me?
  Yes, if you’re over 70½ and charitably inclined.
   

• How this helps me:
  QCDs are a tax-efficient way to support charitable causes while lowering your taxable income, especially if you don’t need the RMD for personal use.
   

 

3.  ​Family Gifting Strategies (Including Gift Tax Exclusion and 529 Contributions)
 

In 2024, you can gift up to $18,000 per person without incurring gift taxes. Married couples can gift up to $36,000 per recipient.

You can also contribute to a 529 college savings plan, helping fund education while reducing your taxable estate. With 529 plans, you can front-load up to five years' worth of contributions in one year (up to $90,000 per beneficiary for individuals or $180,000 for couples).
 

• Does this apply to me?
  Yes, if you want to transfer wealth to family members or help fund a child’s or grandchild’s education.
   

• How this helps me:
  Gifting allows you to reduce your taxable estate and transfer wealth tax-free. 529 contributions grow tax-free when used for qualified education expenses, providing both estate planning and education funding benefits.

 
 

4. Donor Advised Fund
 

A Donor Advised Fund (DAF) is a charitable giving account that allows you to contribute cash, securities, or other assets to the fund, receive an immediate tax deduction, and distribute grants to charities of your choice over time. This tool can help maximize your charitable impact while offering tax efficiency.
 

If you are considering charitable contributions this year, a DAF can allow you to group multiple years of donations into one tax year to maximize deductions. Contributions of appreciated securities are particularly advantageous, as they allow you to avoid capital gains tax.
 

• Does this apply to me?

Yes, if you're seeking a flexible and tax-efficient way to manage your charitable donations, especially if you have appreciated assets or anticipate a high-income year. DAFs are suitable for donors who want to simplify their giving, potentially grow their charitable contributions tax-free, and support multiple charities over time.
 

• How this helps me:

Contributing to a DAF allows you to take an immediate tax deduction for the full fair market value of the donated assets, which can help offset high-income years. By donating appreciated securities, you can avoid capital gains taxes, maximizing the amount available for charity. Additionally, DAFs provide the flexibility to support your favorite causes on your own timetable, with the potential for your contributions to grow tax-free, increasing your charitable impact.

5. Required Minimum Distributions (RMDs)

If you’re 73 or older, you must take your RMD by December 31. If this is your first RMD, you can delay until April 1, 2025, but this would require two RMDs in 2025.

Our team will review your necessary RMDs and reach out if applicable.  RMDs can be invested in a taxable account, sent to a checking account, or mailed as a check.
 

• Does this apply to me?
  Yes, if you’re 73 or older or have inherited an IRA.
   

• How this helps me:
  Avoids the steep 50% penalty on missed RMDs. Even if you don’t need the funds for expenses, reinvesting them in a taxable account can keep the money working for you.
  
   

6. Inherited IRA Rule (10-Year Rule)

If you inherited an IRA after 2019, you must fully distribute the account by the end of the 10th year following the original owner’s death.

If this is your first time taking RMDs from an inherited IRA, additional paperwork with Charles Schwab will be required. If this is applicable, we will work with you to ensure a strategy is in place on when to receive the funds.
 

• Does this apply to me?
  Yes, if you inherited an IRA after December 31, 2019.
   

• How this helps me:
  Helps avoid penalties and ensures compliance with tax rules. Distributing the funds over time, rather than all at once, can help spread the tax impact across multiple years.
   

7. Maximize Employer Plan Contributions (401k, 403b, 457b)

Make sure you’ve contributed the maximum to your 401(k) or employer sponsored plan for 2024. The limit is $23,000, with an additional $7,500 catch-up contribution if you're 50 or older.
 

• Does this apply to me?
  Yes, if you’re still working and eligible for a 401(k).
   

• How this helps me:
  Maximizes tax-deferred savings and lowers taxable income. Plus, if your employer offers a match, that’s free money added to your retirement.
  
   

8. Maximize Retirement Plan Contributions for Entrepreneurs

For self-employed clients or business owners, consider contributing to SEP IRAs, Simple IRAs, or Solo 401(k)s. Each plan has important deadlines:
 

Solo 401(k): Employee contributions must be made by December 31. Employer contributions can be made until the tax filing deadline in 2025.
 

SEP IRA: Contributions can be made until the tax filing deadline (including extensions).

Simple IRA: Contributions should be completed by year-end and no later than January 30th, 2025.
 

• Does this apply to me?
  Yes, if you are self-employed or own a business and want to maximize tax-deferred savings.
   

• How this helps me:
  These plans allow for significant tax-deferred contributions, which can be much higher than traditional 401(k)s, making them ideal for high earners seeking to reduce taxable income.

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9. Cash Balance Plans & Non-Qualified Deferred Compensation (NQDC) Plans
 

If you’re earning more than traditional retirement plans allow for, consider opening a cash balance plan or participating in an NQDC plan to defer extra income and reduce your taxes.
 

Cash Balance Plans: Perfect for business owners or high-income earners, allowing tax-deferred contributions that can exceed $200,000 annually, depending on age and income.
 

NQDC Plans: Defer a portion of your salary or bonus to reduce current taxable income while allowing your money to grow tax-deferred.

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• Does this apply to me?
  Yes, if you’ve maxed out your 401(k) or IRA contributions and want to save additional amounts while reducing your current taxes.
   

• How this helps me:
  These plans allow you to save much more for retirement, lower your taxable income, and grow your retirement funds tax-deferred—an excellent strategy for high earners.
  
   

10. Tax-Loss Harvesting

Your portfolio management team will review your taxable investment accounts for any positions carrying a capital loss. Selling these at a loss can offset gains and reduce your tax liability.
 

• Does this apply to me?
  Yes, if you have taxable investment accounts with unrealized losses.
   

• How this helps me:
  You can offset capital gains and carry forward unused losses to future years, reducing taxes and improving your overall portfolio performance.

 
 

11. Reviewing Your Employee Benefits
 

As the year ends, take time to review your employee benefits, especially with open enrollment periods approaching. Consider your healthcare coverage, retirement plan options, and any other benefits that may require changes.
 

• Does this apply to me?
  Yes, if you’re employed and have access to benefits that may require decisions during open enrollment.
   

• How this helps me:
  Ensures you’re maximizing the value of your benefits package, adjusting for any changes in healthcare coverage, retirement contributions, or other employer-sponsored perks.

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12. Life Insurance Policy Review

Review your life insurance policies to ensure they align with your current financial and family situation, especially if there have been major changes such as marriage, the birth of a child, or significant asset growth.
 

• Does this apply to me?
  Yes, if you’ve experienced any major life changes or asset growth.
   

• How this helps me:
  Ensures your life insurance coverage is adequate for your current needs and estate planning goals, offering peace of mind and protection for your family.
  
   

This guide offers targeted, value-adding strategies to help you make the most of your financial planning before the year ends. As always, please reach out to your team at Atlantic Edge Wealth to review these strategies and see how they apply to your specific situation.