Three year-end planning reminders for investors

Three year-end planning reminders for investors

Despite the ongoing tax reform debate on Capitol Hill and potential for changes to the tax code, there are some important year-end tax considerations and deadlines that remain for 2017.

Required minimum distributions (RMDs) from retirement accounts, as well as gifting rules, involve actions that must be taken before year-end. Updating documents is another part of year-end planning that is important for taxpayers to address when reviewing accounts.


  • Each year, most retirees, beginning at age 70½, must take specific required minimum distributions (RMDs) from retirement accounts, including qualified plans and IRAs. Failure to withdraw funds by the deadline results in a penalty — 50% of the amount required.
  • This includes a final RMD in the case of a deceased account owner. If a deceased IRA owner had reached the required beginning date (RBD), which is April 1 of the year they turned 70½ , then one last RMD is due based on the age of the deceased account owner.
  • There are some instances where an RMD is not required after age 70½. Taxpayers do not need to take an RMD from a Roth IRA or if they are still working beyond age 70½.
  • Consider donating to charity if the RMD funds are not needed. An IRA provision allows taxpayers age 70½ or older to donate withdrawals, including RMDs, up to $100,000 annually directly to a qualified charity, without generating income tax.


  • The annual gift exclusion for individuals is $14,000. Taxpayers may gift up to this amount without having to report a taxable gift. They must, however, make the gift before the end of the year or they will lose the annual exclusion. In the tax debate there has been discussion about reducing or repealing the estate and gift tax. But it is unclear what will happen to those suggestions as the bill is being finalized by a House-Senate conference committee. For example, even though the Senate version of the bill reduces the burden of gift and estate taxes, the provision would “sunset” after 2025.
  • Grandparents or parents may want to consider funding a child’s college education. A special gift tax exclusion of a 529 college savings plans allows individuals to front-load five years’ worth of gifts to a single beneficiary in a single year without triggering a gift tax. Based on the 2017 gifting limits, the maximum for individuals is $70,000 and the limit for married couples is $140,000.

Documents and recordkeeping

A year-end review of accounts should also consider whether beneficiary information is up to date. Life changes may require updates to beneficiary designations on retirement accounts, annuities, and life insurance contracts. Other documents to review include wills, trusts, powers of attorney, and health-care proxies. Plan to meet with a financial advisor and legal counsel if there are changes that need to be made.

It may also be an opportune time to create a document that informs family members about how to access these papers in case of an emergency. A financial advisor can offer guidance on setting up a “roadmap” for family members.


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