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2023 Year-End Planning Checklist

FORVIS Private Client™ provides planning strategies on retirement, charitable giving, estate, income tax, investment, and insurance to consider at year-end.
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As we approach the end of another year, below are helpful planning strategies to consider. Please consult with your FORVIS tax and financial planning professional to better understand how these strategies may impact your personal situation.

Retirement Planning

  • Convert a portion (or all) of a traditional IRA to a Roth IRA. Conversions generally increase taxable income in the year of the conversion; however, Roth IRA conversions can be an effective tool in tax bracket management and planning for distributions in retirement.
  • Make nonqualified IRA contributions and subsequently convert these traditional IRA contributions to a Roth IRA. This is often referred to as the “two-step Roth.” While limited by the annual contribution limit ($6,500 + $1,000 catch-up for those over 50) and the contributions being nondeductible, if done over a number of years, the Roth balance could grow to a sizable amount during retirement.
  • Check year-to-date 2023 retirement plan contributions and make additional contributions to meet the maximum contribution allowed.
  • Review the timing of IRA distributions to help with tax bracket management and to ensure all required minimum distributions (RMDs) are taken.

Charitable Giving

  • For those age 70 ½ and above, gift up to $100,000 of income otherwise taxed as ordinary income directly from an IRA to a qualified charity via a qualified charitable distribution (QCD). For this purpose, the charity must be an Internal Revenue Code Section 501(c)(3) organization; private foundations, supporting organizations, and donor-advised funds (DAFs) do not qualify.
  • Donate appreciated securities held longer than a year from nonretirement accounts instead of cash to a charity. This approach avoids any tax liability associated with the gain while providing a deduction equal to the fair market value of the security gifted limited to 30% of adjusted gross income without regard to any net operating loss carryback. Any excess is carried over for the proceeding five tax years.
  • “Bunch” multiple years of charitable contributions into a single tax year to help push total itemized deductions above the annual standard deduction amount ($27,700 for joint filers, $20,800 head of household, and $13,850 for single filers/married filing separately in 2023).
  • Pair the above “bunching” strategy with the utilization of a DAF to provide flexibility on the timing and determination of which charities to donate to while securing the charitable deduction in the current year.

Estate Planning

  • Review current estate planning documents, e.g., wills, trusts, medical directives, beneficiary designations, etc., to determine if any updates are necessary due to changes in personal situations or state/local laws. Don’t forget retirement plans, insurance policies, and investment accounts.
  • Evaluate the important role trusts can play in estate, tax, and financial planning. Learn more with our FORsights article, “Trust Me: An Exploration Into Trusts.”
  • Utilize the annual gift exclusion ($17,000 per recipient in 2023).
  • Consider gifting up to the annual exclusion (or use the five-year gifting option available) to a 529 college savings plan. Certain states also offer a state tax deduction or credit on certain contributions.
  • For those with estate tax exposure:
    • Fully utilize the lifetime exclusion ($12.92 million in 2023 or $25.84 million for married couples) to “lock in” an historically high exemption amount ahead of the scheduled sunset under the tax legislation formally known as the Tax Cuts and Jobs Act in 2026 that will roughly cut current lifetime exemption amounts in half.
    • Explore strategies to take advantage of depressed valuations in the current market environment by implementing “estate freeze” techniques such as gifts to a grantor retained annuity trust (GRAT), a spousal lifetime access trust (SLAT), or techniques to leverage the current lifetime exemption such as installment sales to an intentionally defective grantor trust (IDGT). Additionally, GRATs and installment sales to an IDGT may be helpful tools for individuals who have used their lifetime exclusion as they are freeze techniques that do not necessarily require the use of exclusion.

Income Tax Planning

  • Review workplace withholdings for adequate tax withholding from paychecks, and remember to incorporate year-end bonuses/business distributions in your tax planning. Review and take advantage of benefits within dependent care and/or medical flexible spending accounts (FSAs) and health savings accounts (HSAs).
  • Review and plan for any carryovers from prior years, such as net operating loss, passive activity loss, capital loss, business credits, and charitable contribution carryovers.
  • With the standard deduction increases in 2023, many individuals may not be able to benefit from their itemized deductions annually. However, assessing deductions you would have otherwise paid annually in one year, you may benefit from the standard deduction in one year and the higher itemized deduction in the other year. Consult your FORVIS tax professional for guidance.

Investment & Insurance Planning

  • Harvest any losses in nonretirement accounts to help offset realized gains while planning with the wash sale rule. Any realized losses carried forward from 2023 can help offset realized gains in future tax years.
  • Analyze specific tax lots to determine the most appropriate shares to sell this year.
  • Review year-end mutual fund capital gains distribution estimates for funds held in taxable accounts.
  • Review the location of assets between traditional IRAs, Roth IRAs, and nonretirement accounts.
  • Review and update life, health, home, auto, and umbrella policies for adequate coverage.

To better understand how these strategies may help your unique situation, please contact a member of the FORVIS Private Client team.

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