👀 Check out a backdoor Roth conversion. 📊 Rebalance your assets if needed. 💵 Max out your 401(k) if you are still working. 🧐 Review required minimum distributions if you are retired.
It’s that time of year when you get to put a bow not just on gifts for loved ones but also your portfolio.Still working? Max out your 401
A backdoor Roth IRA conversion is simply making a IRA contribution, followed by a subsequent Roth conversion, according to Kitces.com. Or, instead of reinvesting your internal inflows such as dividends and interest income into the same overweighted holdings, you can allocate those into areas that are underweighted, said Folkes.
As this strategy is, essentially, a tax deferral, Kuster said it is especially beneficial when losses are generated at higher tax rates and offset by future gains at lower tax rates. “If you think that you might have a heavy capital gains burden this year, expect to stay at a similar tax rate, or that your rate may even go down in the future, talk with your financial and tax professionals,” he said. “They can help you identify whether loss harvesting may be a sound strategy for you.
“Review your financial goals within the next few years and consider how downturns in markets may impact these goals or the long-term success of your portfolio,” he said. “As timing markets during this important segment of your life is unwise, it’s probably worth revisiting your asset allocation and evaluating the impact of placing the funds you need within the next six months to a few years on the sidelines.