Tax-Efficient Planning for the End of 2019

As 2019 winds to a close, it's important to evaluate where your clients are likely to end the year from a tax perspective. Learn which opportunities you should look out for this week in our FinPlan Friday discussion with Joe.

end of year tax moves


FinPlan Fridays

In our video blog series, FinPlan Fridays, Covisum® Founder and President, Joe Elsasser, CFP®, offers his take on the issues financial advisors see every day. Joe is a practicing financial planner with a unique perspective into the challenges for which Covisum provides technology solutions. Join us on the first Friday of every month for FinPlan Fridays, and get helpful tips to grow your financial planning practice. 


Hello and welcome to FinPlan Friday. Here we are coming into November. It's that time of year when we have to pay a lot of attention to where our clients are likely to end the year from a tax perspective because so many things aren't fixable after we reach December 31.

Some of the things that are probably on your mind are: making sure that your clients have taken their entire required minimum distribution. You're probably running reports from various sources be it custodians or different insurance companies to make sure those RMDs have been taken. You're probably running realized gain and loss reports.

Some of the things you might not be thinking about are harvesting capital gains. Yes, I said harvesting capital gains, not capital losses. Harvesting capital losses, for most clients, is going to be something we're going to do every year. But for some clients, particularly those in that transition window between early retirement (maybe they retired at 62) and age 70 or 70 1/2 when Social Security and required minimum distributions are present, you have this window. And sometimes during that window it can make sense to harvest capital gains—maybe up to around $100,000 if you can keep all the other ordinary income off the table.

In other circumstances you might be looking for Roth conversions. Sometimes those Roth conversions can actually be free. You can take that Roth conversion up to the beginning of the 10% tax bracket and occasionally you might not have any other ordinary income. So, getting $10,000 or $15,000 out of an IRA with zero tax bill is a real opportunity. In other circumstances you might be looking to convert right up to the point where you start to get the Social Security tax torpedo or maybe just to the edge of a Medicare premium threshold. Each of those client's situations is different. And so hopefully you've got a tool set that allows you to identify those opportunities. If you don't, Tax Clarity® can help you do all of those things—whether it be harvesting capital gains or harvesting capital losses or determining which point you'll want to do a Roth conversion up to for this year.

Whether you use Social Security Timing® to optimize a Social Security strategy, Tax Clarity to identify tax opportunities, or SmartRisk™ to analyze portfolio risk, these software options can aid in growing and expanding your business. Combine these tools with Income InSight® to create one space to illustrate multiple financial planning techniques and show clients what their retirement could look like.

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