Even though the elections are over, no one knows what Congress will do by the end of the year when it comes to taxes so retirees are advised to look at strategies to cut their tax bills now rather than wait for Congress to act.
Some considerations from Kiplinger’s: Max out on tax-deferred retirement savings plans. The limits for contributions to a 401(k) or other employer-based retirement plan for 2017 is $18,000; if you are over the age of 50, you can contribute an additional $6000 each year.
Contributing the maximum is also a smart move if you plan to convert a traditional IRA to a Roth IRA since it lowers your taxable income. IRA contribution limits in 2017 are $5,500; those over 50 can stash away $6,500.
Make gifts before 2017 ends. The exemption for a gift has grown to $5.49 million and a married couple can shield $10.9 million. The annual gift tax remains at $14,000 per year.
Pierchoski Estate Law can help you learn whether gifting makes sense for you this year.
Postpone RMDs as long as possible. Experts recommend you wait until mid-December to take your required minimum distributions from your IRAs. Postponing your RMD as long as possible (but not past mid-December) may pay off.
We can help you plan these distributions and gifts. Call us at 931.363.7222.