gmhTODAY 11 gmhToday Nov Dec 2016 - Page 92

Taking Advantage of Your Year-end Benefits By Daniel T. Newquist, CFP®, AIF® Dan Newquist, CFP®, AIF®, Principal & Senior Wealth Advisor with RNP Advisory Services, Inc., a registered investment advisor, Morgan Hill. He can be reached at 408- 779-0699 or dnewquist@ Securities offered through Foothill Securities, Inc., member FINRA/SIPC, an unaffiliated company. 92 As the end of the year approaches, it’s important to take advantage of any annual benefi ts that are available to you before the end of the year. Here is a short list of some of the more popular items to consider. Maximize Retirement Contributions When contributing to a company retirement account, like a 401(k), fi rst consider investing up to your company’s match level and then consider maxing out your contribution limit. The contribution limit for 2016 is $18,000 for participants under the age of 50; participants over the age of 50 can contribute an additional $6,000. Retirement accounts are a great way of putting money away that can grow tax deferred or tax-free (depending on your account type). While individual retirement accounts (IRAs) allow you to contribute for this calendar year up until the April tax fi ling date of next year, it is a good thing to check if you are eligible to make a contribution and if so, make a plan to invest. Individual contribution rates are $5,500. Individuals age 50 and older can contribute an additional $1,000. Give to Charity If you are planning to donate money or goods to a charity, be sure to do so by the end of the year to potentially quality for a tax deduction. Taxpayers that itemize their deductions (i.e., you or your tax preparer lists out all of your deductions instead of using the fi xed dollar amount standard deduction) may be able to lower their tax bill by donating to qualifi ed charitable organizations. You can also donate securities (e.g., stock) that have a low cost basis to avoid paying the capital gains tax on those securities. And, you still may be able to receive a tax deduction for the market value of your donation. GILROY • MORGAN HILL • SAN MARTIN Take your Required Minimum Distribution (RMD ) If you are age 70 ½ or older, you are required to take a minimum distribution from your retirement accounts. This is possibly the most important task to remember about your retirement accounts. If you fail to take your RMD in a year you are required to do so, you may face a 50% tax penalty on that required distribution amount. You have saved a long time, and paying penalties is a waste of your nest egg. Spend Down Flexible Spending Account A Flexible Spending Account is an account your company may allow you to put money into to help pay for medical expense with before-tax dollars. Unfortunately, the money in this account can only be used during the year it was deposited, and any remaining balance disappears when the ball in Times Square drops. So, now might be a good time to get those new glasses, or have any dental work you have been putting off done. Open An Educational 529 Savings Plan These accounts can be set up to help save for educational expenses. They enjoy tax free growth, and may even provide income tax advantages, depending on your state. It is important to note that these accounts must be used for educational expenses, otherwise a hefty tax could be owed. NOVEMBER/DECEMBER 2016