Six Year-End Portfolio Planning Conversations

12/15/2021 - By Chris Stennett, CFP

The end of the year is fast approaching! But before you say goodbye to 2021 and hello to 2022, here are a few conversations you should have with your CPA and Financial Advisor before December 31. 

1. Retirement Account Contributions

It’s important to make sure you’re on track for funding your future retirement. Now is a good time to check across your retirement plans and see how much you’ve contributed for the year and decide what changes, if any, should be made for next year. Some key questions to ask yourself are: “Am I saving enough? Am I leaving any employer matching contributions on the table? Is Pre-tax or Roth more appropriate?”

2. Required Minimum Distributions

Required Minimum Distributions (or RMDs) are mandatory amounts that a retirement account owner must withdraw each year starting in the year that he or she reaches 72. These withdrawals typically need to be taken by the end of the calendar year, though in some cases this withdrawal can be delayed. Now is the time to review your retirement accounts to ensure you’ve satisfied your requirement for the year. The rules around skipping RMDs are very nuanced, and the punishment for missing your required payment is steep (50%)! Consult with an expert before you decide to delay taking them. 

3. Roth IRA Conversions

Roth Conversions have become very popular in recent years as tax law changes have brought this strategy to the forefront of most investors' minds. This strategy involves taking money from a Traditional IRA and moving it into a Roth IRA. Because funds held within a Traditional IRA are typically dollars that have never been taxed and Roth accounts are after-tax accounts, this strategy creates a taxable event. The reason someone would typically use this strategy is because they have a belief that they could pre-pay taxes at today’s rates with the expectation that they will be in a higher tax bracket later in retirement. Investors can choose to convert some, or all, of their pre-tax IRA balances to Roth. Because this is a taxable transaction, investors should be mindful of how much they convert so that they don’t push themselves into a much higher tax bracket. 

4. Investment Loss Harvesting

Next, we have a strategy known as Loss Harvesting. The idea of this strategy is to target specific investments within a taxable (non-retirement) account that have unrealized losses and sell some of those losing positions to create a realized loss. We typically target investments that have been held for longer than one year, so this loss is applied to Long-Term Capital taxes. The purpose for this strategy is to partially or wholly offset Long-Term Capital Gains and/or create future carry-forward Long-Term Capital losses for subsequent tax years. That’s because Long-Term Capital Losses offset Long-Term Capital Gains in a given tax year, and in a year like 2021, there are likely to be taxable Long-Term Capital Gains within most investors' portfolios. One thing to keep in mind when executing this strategy is that wash sale rules apply - meaning you can’t sell the investment and count the loss if you repurchase the same or similar investment within 31 days. One very interesting loophole that exists today involves losses on cryptocurrencies. Currently, wash sale rules do not apply to cryptocurrency transactions.

5. Investment Gains Harvesting

Along the same lines as Loss Harvesting, we have a lesser-known strategy called Gains Harvesting. Investment Gains Harvesting is a strategy to accelerate income into the current tax year by selling an existing investment within a taxable account for a gain. We commonly call this a “realized gain”. Unlike Loss-Harvesting, wash sale rules do not apply when an investment is sold for a gain. Upon selling an investment for a gain, the account holder then repurchases the same investment at current prices, which increases their cost-basis in the holding. With this strategy we target investments that have been held for longer than one year to qualify for Long-Term Capital Gains rates.

You may be asking yourself, why would someone do this? Well, it all boils down to taxes. At certain lower income levels, the tax rate for Long-Term Capital Gains is 0%. In this series of transactions, an investor can realize a gain by selling a position, owe 0% taxes on the gain and then repurchase the same investment to increase their cost-basis. Even if this investor didn’t qualify for the 0% Long-Term Capital Gains rates, this strategy might still be beneficial if there is a belief that an investor’s future LTCG rates will be higher than today’s rates. This could happen if the investor expects their income to increase, tax laws to change or even a possible change to their marital status.

6. Charitable Giving

For some, the season of giving extends beyond their immediate families to charitable organizations. There are some potential tax benefits to giving depending on what and how you give. Working with your CPA, we can calculate the net impact of making a charitable contribution on your income taxes. For some people, they might be able to push themselves into a lower tax bracket or decrease their tax liability by claiming a higher deduction. If you’re already charitably inclined, work with your financial team to discuss the giving strategies available and determine if they can positively impact your taxes.


With all the strategies discussed, the rules that govern them are very nuanced and contain too much detail to capture in a brief article. Always consult with a qualified financial professional before executing them. At Saltmarsh, we’re uniquely positioned to help individuals navigate the complex world of investments and taxes. Our Financial Advisors and Tax Professionals have the tools to help you understand the impact of Roth Conversions, Gain and Loss Harvesting and all the other strategies discussed above to determine if it’s an appropriate strategy for you to take before year-end. 

About the Author | Chris Stennett, CFP®

Chris is a financial advisor and Certified Financial Planner® practitioner for Saltmarsh Financial Advisors, LLC, an affiliate of Saltmarsh, Cleaveland & Gund. He serves individuals and organizations as a comprehensive financial planner and coordinator of investment activities. His areas of expertise include investment management, income planning, tax and estate planning and risk management. Chris has over a decade of experience as a wealth manager working with teachers, federal and state employees, retired Armed Forces and private-sector employees. 

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