F I SCAL FI TN ESS
MICHAEL J. DONNELLAN King Financial, Inc.
YEAR END REVIEW PREPARING FOR 2019
As the end of the year quickly approaches, here are a couple things all investors need to do in preparation for 2019. These are a few of the most pressing issues and most do not take too much of your time.
TAX ISSUES
MUTUAL FUND DISTRIBUTIONS
Probably the most complicated and time-consuming issue, but the one that can cost you, or save you, the most money. Some clients may need to generate gains or losses this year while the tax environment is still favorable. Most taxpayers pay 15% in Long Term Capital Gains (20% applies for those in the highest tax brackets).
As a general rule, don’t buy a mutual fund near the end of the year, without first checking when, and if, the fund will be paying out a capital gain for the year. If you buy Fund ABCDX on December 5th and they distribute a capital gain for the year on December 15th, you are responsible for the tax on this year’s capital gain, even though you held the fund for only 10 days.
Another issue in this category is the Required Minimum Distributions (RMD) from qualified retirement accounts. Clients over 70 ½ must take their RMD this year or face stiff tax penalties of 50%. Also be aware of required distributions from Beneficiary IRAs.
ESTABLISH RETIREMENT ACCOUNT Small business owners might want to establish a retirement plan, such as a 401(k) plan, SEP-IRA or Simple IRA, for their business in the current tax year. Also check out the Individual 401(k) plans that many fund families and firms continued on page 16
14 | Official Publication of The Ohio Landscape Association