Financial Planning

Year-End Checklist

Use this checklist to keep your portfolio on track to achieve your financial goals

Year-End Checklist

The end of the year is an opportune time for reflection and goal setting, especially when it comes to your financial plan. Making fourth-quarter adjustments to your investment and tax strategies can help keep your portfolio on track toward your financial objectives. Complete your 2017 year-end financial planning by following this checklist:

Tax Strategies

Strategizing during the Fourth Quarter

Now that the year is almost over, it is the ideal time to review your overall tax situation to see where you stand. A big jump in income can affect everything from the underpayment of taxes to a significant hike in the AMT. A drop in income, on the other hand, may lower the value of tax-saving strategies and mandate a shift in approach.

Tax loss selling

Talk to your advisor about selling securities with significant losses. For mutual fund accounts not subject to sales

charges, consider selling funds with capital losses this year and replacing them with similar style funds or ETFs. Don’t forget to take a look at your Fixed Income accounts for potential gains or losses if you have offsets in equities or other product areas. Consult with your investment or tax advisor if the “wash sale” rule might apply to you.

Remember any prior-year carryovers

Investors typically only think about offsetting stock or fixed income investment gains with investment losses. However, there are many other situations where this strategy can be advantageous. For example, you may have (or be expecting) gains from mutual fund distributions, business ownership interests or real estate. Talk to your advisor to see if you have additional situations where you can offset losses.

Make a $14,000 gift

Remember to take advantage of the annual gift exclusion by making your gifts by December 31. The limit for tax-free gifts this year is $14,000 per person per recipient. (Please Note: This can be $28,000 per couple per recipient).

Review Your Estate Plan

Overall, it’s important to review the terms of your estate plan annually. Make sure you have established appropriate beneficiaries for all retirement accounts and life insurance products. Certain types of beneficiaries may have distribution advantages over others. Consult with an Advisor to ensure that you understand the implication of selecting one beneficiary over another.

Charitable Giving - Donor Advised Funds/Pooled Income Funds

If you have recently come into a large inheritance and have charitable inclinations, consider investing in donor advised funds. Invest with cash or stock to receive an immediate tax deduction. Over time, you can move the money out of the donor advised fund into a recognized charity, while the money remaining in the donor advised fund continues to grow with the market. Donations are irrevocable. The Board of Directors of the Fund has ultimate control over all assets. Donors have no right to income or principal and account values will fluctuate.

The amount ultimately available for Donor recommended grants may be more or less than Donor contributions. Potential donors should consult their tax advisors.

Pooled income funds allow the same attributes and processing of a donor advised fund, but they allow for an annual income stream, usually between 3-7%, depending on the fund allocation you choose. Pooled income fund values fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

Availability of certain federal income tax deductions may depend on whether you itemize deductions. Rules and regulations regarding tax deductions for charitable giving vary at the state level. Please check with your tax advisor. Tax deductions herein refer specifically to federal taxes.

Tax Suggestions For Depreciated Securities

UTMA / UGMA Transfer

If you have a child with a taxable Uniform Transfers to Minors Act (UTMA) or Unified Gift for Minors Account (UGMA), sell the depreciated securities and transfer the cash to a 529 Plan. While the income in a traditional UGMA account is taxable, income from a 529 Plan is tax free if used for post-secondary educational expenses.

Clients subject to the Alternative Minimum Tax (AMT)

There are a variety of strategies that can help you avoid or minimize the impact of AMT, including deferring certain tax deductions or avoiding exposure to private activity bonds. Ask your advisor about the advantages of adding tax-favored investments to your portfolio. Investments in bonds are subject to risks, including credit, interest rate and inflation and are not suitable for all investors. Interest income may be subject to the federal alternative minimum tax. Other state and local taxes may apply.

Consider Deferring Income

Deferring income into 2018 may be a good idea for taxpayers who expect to be in a lower tax bracket next year. Employees may find it tough to defer salary or wages into next year but if self-employed you might have more ability to defer. If your company offers a deferred compensation plan and you have the ability, consider participating in that plan. It is important to understand the risks in participating in such a plan before participating.

Consider Accelerating Deductions/Income

Accelerating income into 2017 may be a good idea for taxpayers who expect to be in a higher tax bracket next year. “Bunching” your threshold miscellaneous itemized deductions and medical expenses in a tax year may be beneficial as they are only deductible if they exceed a percentage floor of your AGI. This will allow you to itemize those deductions in a year when you might not be able to. In addition, prepaying or accelerating deductible expenses such as charitable contributions, 2018 property tax, and deductible medical expenses might make sense if you plan on being in a higher tax bracket this year. Consult with your tax advisor about ways that would be most beneficial for 2017 and 2018.

Retirement Planning

Contribute to qualified retirement plans

The maximum compensation that can be used to determine retirement plan contributions is $270,000 in 2017. Some defined benefit plans may be under-funded due to prior poor market performance. If you have a qualified retirement plan, consult your accountant so you can budget this year’s contributions and make them before the deadline. If you contribute to a 401(k) plan, review your contributions and decide whether you can or want to make additional contributions (the Deferral Limit is $18,000 for 2017, with a $6,000 catch-up contribution available to those 50 or older). Consider the type of 401(k) deferral if a Roth 401(k) option is offered. Remember that the deferral limit is aggregate of pre-tax and Roth deferral contribution. As with Roth IRAs, Roth 401(k) contributions allow tax-free qualified distributions and do not require RMDs at age 70½.

Great Strategy: A combination of IRAs

You can maximize your IRA contributions through a combination of different types of IRAs to stay below the aggregate contribution limit. Make the most tax-beneficial contributions first, up to the limit, and put the remaining balance into a Roth IRA or a non-deductible IRA if you meet the eligibility requirements.

Traditional IRAs. The contribution deadline for 2017 is April 17, 2018

The 2016 contribution limit for traditional IRAs is $5,500, or $6,500 if you are over 50. Your contribution is fully deductible if you are not a participant in a qualified plan or if your adjusted gross income is at or below $62,000 for singles, $99,000 for married couples filing jointly (where both spouses are covered by a plan), or $186,000 if only one spouse is covered by a qualified plan. The contribution may be partially deductible if adjusted gross income is below $72,000 for singles, $119,000 for married couples filing jointly (where both spouses are covered) or $196,000 if only one spouse is covered.

Roth IRAs. The contribution deadline for 2017 is April 17, 2018

As with the Traditional IRA, the 2017 contribution limit for a Roth IRA is $5,500, or $6,500 for those over 50. You won’t get the tax deduction, but you could make up for it at retirement with tax-free income. To make a full contribution, your adjusted gross income must not be more than $118,000 if single or $186,000 if married filing jointly. Partial contributions are available if income is less than $133,000 if single or $196,000 if married filing jointly. Unlike traditional IRAs, contributions can be made after age 70½.

Required Minimum Distributions – Annuities

Ask your advisor about the IRS regulation for Required Minimum Distributions from an Annuity contract. According to the regulations, RMDs from an annuity contract must be calculated by including the “actuarial present value of any other benefits provided in the contract.” This regulation may result in a slightly higher RMD amount, and is applicable to both lifetime RMDs and post death distributions from a qualified annuity contract.

Qualified Charitable Distributions available in 2017

Individuals over 70-1/2 are able to make a distribution up to $100,000 directly from their IRA accounts to a Qualified Charity, without reporting that distribution as income. Donations will now count as part of the IRA owner’s required minimum distribution.

Open Individual 401(k)/Keogh or Individual Defined Benefit Plan: The establishment deadline for 2017 is December 31

The maximum contribution to Individual “defined contribution” plans for 2017 is $54,000 ($60,000 for those 50 and older). The contribution limits for defined benefit plans may be much higher. You must establish your account by December 31, but have until your tax-filing deadlines (including extensions) to make the actual contribution.


A Combination of Education Savings Plans: To take advantage of different features and benefits, you can contribute to both a Coverdell ESA and a 529 Plan(s) in the same year without a penalty.

Contribute to a 529 plan – Cash Only

• You can contribute up to $14,000 (or more with gift tax consequences) of your annual gift tax exclusion ($28,000 for married couples). Furthermore, you may elect to use five years’ worth of annual first tax exclusions to shelter an immediate contribution of up to $70,000 ($140,000 for a married couple) into a 529 Plan for one beneficiary. If you are planning to contribute to a 529 Plan using the annual gift tax exclusion, you must do so by December 31.

• Unlike most other tax incentives in the law, 529 Plans are open to everyone, regardless of income level or the age of the children or grandchildren.

• There is no limit on the number of 529 Plans per child. In addition, 529 Plan funds can be transferred between family members (subject to limits).

• 529 Plans are the only revocable gifts that remove assets from the donor’s taxable estate. If you choose to revoke, you will incur a 10% penalty on earnings, taxed at ordinary income rates.

• Donations to 529 Plans can be deductible from state income tax, depending on the plan used and residence of the plan owner.

Contribute to a Coverdell ESA – Cash Only (formerly known as the “educational IRA”)

While you can only open one Coverdell ESA per child, you have the flexibility to use the funds for elementary and secondary education as well as college.

The maximum contribution for 2017 is $2,000, and the contribution deadline is April 17, 2018. You may not contribute to a Coverdell ESA if your adjusted gross income on a joint return is more than $220,000. However you may have another family member open the account for the child; the $2,000 can be given to the family member without triggering the gift tax.

Remember, there is no federal income tax benefit associated from contributions to an education savings plan. State tax benefits vary from state to state. 

Important Deadlines

Alternative Investments

Consider the redemption terms of Limited Partnership holdings. Many require 60 days’ notice prior to quarter end.

Partnerships may also hold back 5-10% of the redemption until tax year 2017 filings are complete which can typically be from April to October 2018. Many Limited Partnerships will issue only a preliminary K-1 prior to April 17, 2018. As a result, be prepared to file for an extension in anticipation of final K-1s by October 15, 2018.

Fund/Review Insurance Policies

Funding an insurance policy is critical to bridging income in the event of the death of a family member. If you have insurance policies used to plan for future estate taxes, as well as for general income sustainability, review the amounts and cost of insurance with your advisor to make sure your needs are still being met. Together, you can make sure the policy is set up correctly so that the proceeds are not included in the estate and that the correct beneficiary is established.

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Investors should consider the investment objectives, risks, charges and expenses of the plan carefully before investing. An official statement, which contains this and other important information, can be obtained from your financial professional. Please read carefully prior to investing.

529s: Before investing, investors should consider whether their home state or their designated beneficiary’s home state offers any state tax or any other benefits such as financial aid, scholarship funds, and protection from creditors that are only available to residents of that state. Any state tax benefits associated with a 529 plan apply only to residents of the state sponsoring the plan. 529 plans value will fluctuate so that an investor’s shares, when redeemed may be worth more or less than their original cost. Withdrawals may be subject to state income taxes depending on the participant’s state of residence. Non-qualified withdrawals are subject to a 10% penalty. Participation in a 529 plan does not guarantee that contributions and the investment return, if any, will be adequate to cover future tuition and other higher education expenses or that a beneficiary will be admitted to or permitted to continue to attend and institution of higher education. Neither SunTrust Banks, Inc., nor any of its affiliates underwrite 529 plans. 529 plans are offered by SunTrust Investment Services.

Variable Annuities: All guarantees are subject to the claims paying ability of the issuing insurance company. Variable Annuities are long-term investments and involve fees and expenses not typically associated with other investments. Surrender charges may apply in the early years of an annuity contract. Earnings will be taxed as ordinary income at withdrawal. Withdrawals prior to age 59 ½ may be subject to a 10% penalty. Variable annuities values fluctuate so that an investor’s shares, when redeemed, may be more or less than their original cost. Investors should carefully consider the investment objectives, risks, and charges and expenses of a variable annuity before investing. This and other information can be found in the prospectus for the contract and its underlying investment options which can be obtained from your financial professional. Please read it carefully prior to investing.

Investing in an annuity within a tax-deferred account such as an Individual Retirement Account (IRA) will provide no additional tax savings.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.