As the year comes to a close and Christmas is upon us, it is a time to gather with friends, family and rejoice in the glory of the holiday. Unfortunately, it also means that we are one day closer to April 15th, 2014, and that time is running out regarding your finances and investments in 2013. This week we wanted to provide some insight on proper actions to take at the end of the year.
We constantly remind clients and prospective clients of how important it is hold on to statements from your financial institution(s), your year-end statements specifically. Many clients or investors assume that if they have at any point been a client of a financial institution, that their previous records are safe and readily available. The truth of the matter is that regulations do not require institutions to hold on to those documents indefinitely, and they will eventually be destroyed. Further, if you work with a broker and remove them as your broker of record, they may not be able to provide you with cost basis information or account information as they will no longer be allowed access to your records by the clearing firm. We encourage everyone with investments to watch for year-end statements, keep them in a safe place, and going forward it is best to maintain all documents regarding investments in a file until tax time.
This next message is important for readers over the age of 70 with employer sponsored plans such as a 401(k) or a 403(b), or IRAs; be sure that you are current with your required minimum distributions (RMDs). The IRS requires that individuals with those types of plans begin taking distributions “the year in which you turn age 70½. However, the first payment can be delayed until April 1 of the year following the year in which you turn 70½. For all subsequent years, including the year in which you were paid the first RMD by April 1, you must take the RMD by December 31 of the year.” A failure to do so can result in hefty penalties. We recommend contacting a tax professional to ensure that you are withdrawing the proper amount for your RMD.
Lastly, there are tax benefits for contributions to qualified plans such as IRAs or HSAs, but also for charitable contributions. We recommend that if you have not maxed out your IRA or HSA contributions for the year that you do so (it is also best to contact a tax professional regarding the maximum amount that you can contribute to these plans given your other investments or your personal tax bracket), and that if there are any charities that you wish to support, that you write and mail a check by the end of 2013, and save a photocopy of that check with your tax files.
While these are our words of wisdom going into the holidays, it is important to remember that this season is about joy and celebration, and not to let things like taxes, investments and the IRS sully what is such a wonderful time of year.
From everyone at Treece Investment Advisory Corp., we wish you a Merry Christmas and a Happy Holiday Season!