Year End Thoughts
The following ideas might help you (or a loved one) jump start the New Year.
Tax Loss Strategy
Most taxable portfolios hold some winners and “losers.”  One strategy is to sell any positions that are down and replace them with comparable investments.  That can generate a tax savings as long as the wash sale rules are followed.  This works well when:
  1. The loss position is in a taxable account
  2. The replacement investment has similar upside potential to the original investment
  3. The tax rate in the current year is likely to be higher than the tax rate in future years
Tax Benefit from College Savings
In Illinois and other states, 529 college savings plans are tax deductible at the state level.  This means you can get back 3.75% on 529 contributions in tax savings in Illinois.  If you put in the maximum $20,000 for married couples ($10,000 for singles), you can save $750 in taxes. 

There is no time limit for keeping the money in a 529 college savings account.  So, deposits made in December can be used for tuition, room & board and other qualifying expenses the same month or later.  This strategy works for parents, grandparents, aunts & uncles – basically anyone who would like to contribute toward college expenses through a 529 account.  Unlike IRA contributions which give you until April 15 of the following year, 529 contributions must be made by December 31 to apply to the current tax year.

Note: Golden Trail Advisers does not charge the annual 0.5% fee for its investment management clients. 
IRA Contributions (Includes SEP and Roth)
Please check in with us about the possibility of setting up or adding to your IRA for 2015.  While you have until April 15, 2016 to fund you IRA for 2015 tax purposes, our experience has shown that most people do their taxes earlier and sometimes miss the opportunity for doing this.  Whether you can put money into an IRA for tax deferral (or tax free investing via Roth) depends on the following:

  • Income level
  • Whether income is “earned”
  • Eligibility for company retirement plan
  • Spouse’s retirement plan
This strategy can work even if you do not have “new” money.  If you qualify for a contribution, you can use money from a taxable account to fund your IRA.
  Increasing Your Income  
You may know someone (adult child or grandchild) who would like to make faster progress toward his or her financial goals.  They may have done everything within reason to bring down expenses.  The only other option is to increase income.  Consider the following:

  • Part-time job
  • New job in the same field
  • New job in a different field
  • Side business
There are many free sites on the Internet to give you ideas about the above.  The part-time jobs list is long: from bartender to virtual assistant and from dog-watcher to Uber driver.   

Feel free to forward these thoughts to anyone who might benefit from them.

Mike Sedlak, CFP®, CFA, CEPA, MBA   |    |   Golden Trail Advisers, LLC |         630-323-1111 Phone                 |        630-323-6540 Fax             |