News and Commentary

Year-End Financial Planning Can Yield Significant Opportunities by Scott Montgomery, CLU, ChFC

The hours are ticking away to the end of the year, leaving individuals with a limited window of time to potentially minimize their tax liabilities and maximize savings for 2018 and beyond. With the new tax law in place as of Jan. 1, 2018, it is more important than ever that you engage professional counsel to plan around the provisions that change many of the rules and strategies you may have relied on in the past.

Remember Retirement

While it may be years or decades until your actual retirement, it is never too early to start saving for your golden years. If you work for an employer that offers a 401(k) retirement plan, you have until December 31, 2018, to defer from your salary a maximum contribution of $18,500 in pre-tax dollars (or $24,500, if you are 50 or older). Contributions to 401(k) plans can reduce your taxable income in the current year, and the money you save can grow tax-deferred until you take withdrawals after the age of 59 ½.

If you do not have access to an employer-sponsored retirement savings plan, there is still time to set up an individual retirement account (IRA) for yourself and/or your spouse. The maximum amount you may contribute to a traditional IRA or Roth IRA for 2018 is $5,500, or $6,500 if you are age 50 or older. The type of IRA you are eligible to set up will depend on your filing status and annual income.

 Take Required Minimum Distributions from Retirement Accounts

If you are 70 ½ years of age or older and you did not work in 2018, you have until Dec. 31, 2018, to take a required minimum distribution (RMD) from your retirement accounts, including traditional IRAs, SEP IRAs, SIMPLE IRAs, and 401(k), 403(b) and 457(b). If you meet this age requirement but you are still working you may postpone the RMD. However, failure to take a taxable RMD during your retirement will result in a penalty of 50 percent of the undistributed amount.

 Harvest Capital Losses

If you sold investments for a profit in 2018, you may be able to reduce or even eliminate your exposure to taxable gains from these asset sales when you sell other securities, real estate or assets that have decreased in value. This strategy of tax-loss harvesting allows you to potentially generate a deduction that could reduce your taxable income and counter a recognized gain in the current year.

When harvesting capital losses, it is critical that investors first consider whether or not asset sales make sense in relation to their existing investment strategies. Disposing of an asset solely for a tax benefit may disrupt and derail your long-term financial goals. Consult with your tax accountant and financial advisors employing this strategy in order to avoid costly mistakes, such as violating the IRS’s wash-sale rules.

Defer Capital Gains

With the new tax law, individuals now have two opportunities to potentially defer or even eliminate capital gains from the sale of certain assets. For example, investors can defer taxes on the sale of real estate by completing a 1031 exchange and reinvesting those gains in similar like-kind real property. In addition, under the law’s Opportunity Zone program, taxpayers may defer or even eliminate capital gains tax when they reinvest the proceeds from an asset sale into a business or property located in any of the nation’s more than 8,000 opportunity zones.

Give Gifts

By making gifts of money or property, either to charities, family members or friends, you can potentially reduce the amount of your income that will be subject to tax. The new tax law limits the benefit of the charitable contribution deduction solely to those taxpayers who itemize deductions on their federal income tax returns beginning in 2018. However, itemizing taxpayers who make significant donations in 2018 can deduct more of their giving thanks to the new law’s increase in the deduction for charitable contributions of cash to 60 percent of the taxpayer’s adjusted gross income.

In addition, you may have an opportunity to reduce your taxable income and preserve your assets from exposure to estate and gift taxes when you give gifts of $15,000 or less to as many people as you wish before Dec. 31, 2018, or $30,000 or less per gift for married couples filing joint tax returns. Therefore, a married couple with two children and four grandchildren may gift $30,000 to each of their six heirs, or a total of $180,000 for the year, free of transfer taxes. It is important to remember that there is no annual limit on the amount you may gift tax-free to your spouse unless he or she is not a U.S. citizen.  Similarly, you may gift as much as you like directly to an educational or medical institution to cover the costs of tuition or medical expenses for another person.

Preserve Assets

The entity you select to hold your personal and business assets can have far-reaching effects on your exposure to income, estate and gift taxes; privacy; protection from creditors; and control over distributions of assets. The end of the year is a good time to meet with professional advisors to review the assets holding structures you currently have in place and make adjustments, as needed, to align with changing life circumstances.

Get a Year-End Financial Check-Up

Everyone’s individual financial situation and long-term savings goals are unique. There is no one strategy that will always apply equally to all taxpayers or investors. One of the best ways to determine what tactic will best fit your needs is to meet with financial advisors and tax professionals. Their qualifications and experience can help to assess your current financial position and develop a comprehensive plan to help you reach your goals and those you set for future generations.


About the Author: Scott Montgomery, CLU®, ChFC®, is a financial planner and director with Provenance Wealth Advisors, an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants, and a registered representative with Raymond James Financial Services. For more information, call (954) 712-8888 or email

Provenance Wealth Advisors (PWA), 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Scott Montgomery is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC. Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.


This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Investments mentioned may not be suitable for all investors. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. Investments mentioned may not be suitable for all investors. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Raymond James does not provide tax or legal services. You should discuss any tax or legal matters with the appropriate professional. Every investor’s situation is unique. Prior to making an investment decision, please consult with your financial advisor about your individual situation and consider your investment goals, risk tolerance and time horizon.


401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. RMD’s are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.