The Journey: 6 Holiday Gifts For Your Future Self

By Janet Kidd Stewart
Tribune News Service

WWR Article Summary (tl;dr) Janet Kidd Stewart urges readers to consider five low-impact financial moves in the weeks ahead. As Stewart says, “As gifts to ourselves, these are more like stocking stuffers than grand gestures under the tree, but they can make a real difference in your pocket down the road.”

Tribune News Service

In a few weeks the holidays – and the tax year – will be over. With so much tax uncertainty in Washington, it’s tempting to make some pre-emptive moves this month to set yourself up for future savings.

Resist the urge, said Mari Adam, a veteran financial planner and president of Adam Financial Inc. in retiree haven Boca Raton, Florida.

“What gets people into a lot of trouble is making big financial decisions based on what they think will happen,” Adam said.

Instead, consider these five low-impact financial moves in the weeks ahead. As gifts to ourselves, these are more like stocking stuffers than grand gestures under the tree, but they can make a real difference in your pocket down the road:

–– Open a Roth IRA. Whatever the tax landscape looks like in the future, it’s always smart to contribute to a Roth IRA if you qualify, Adam said. If your modified adjusted gross income for 2017 is under $118,000, you can sock away $5,500 ($6,500 for those over 50) in a Roth. Taxpayers don’t get a deduction for the contribution, but the money grows tax-free and is generally withdrawn tax free in retirement. Importantly, particularly for young savers starting out, account holders can withdraw their contributions (but not earnings) penalty-free if funds are needed.

–– Undo an earlier decision. The House of Representatives’ version of the tax bill would do away with so-called Roth re-characterizations, where taxpayers could reverse their conversions from traditional IRAs to Roth IRAs. This is often done after a big market decline, helping taxpayers avoid a big bill for conversion even though their investments fell. So, if you converted funds this year and think you might want to change your mind, consider re-characterizing this month, said Mark Luscombe, principal federal tax analyst with Wolters Kluwer Tax & Accounting.

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