Already Planning for 2024 (Part 1)

Categories : Financial, News
September 13, 2023

From the perspective of a professional financial planner, 2023 is nearly over. From the standpoint of elected federal officials, 2023 is waning, with far too much business remaining undone (as usual). How many of our individual businesses would survive if we operated the way the federal government runs our nation’s business? Elected officials hold power over your money to a degree that concerns, and frequently infuriates, most Americans.

One important aspect of the relationship Adam and I, as Certified Financial Planners® enjoy, with both clients and radio listeners involves year-end planning. Although many weeks remain in 2023, time seems to accelerate between now and New Year’s Eve. Several important items need to be addressed in remaining 2023. Most obvious are Required Minimum Distribution (RMD) requirements for Retirement Accounts.

People who turn 73 this year (2023) are subject to RMD rules for the first time. They are not, however, required to take their first actual distribution in 2023. Instead, IRS allows these people to delay their first RMD until the end of March, 2024. The catch (there’s always a catch) is that those people will have to take a second RMD before 12/31/2024. This decision, like others in the RMD discussion, should be based on taxes and other individual concerns.

Also available in the RMD planning arena is the Qualified Charitable Deduction (QCD), which allows anyone who has attained age 70-1/2 to donate directly from a Retirement Account to a qualified charity, while satisfying RMD requirements for the QCD amount(s). Doing so prevents the taxpayer from having to claim the distribution as taxable income. This process reduces current income tax, even for taxpayers electing the Standard Deduction.

A third consideration is the Qualified Longevity Annuity Contract (QLAC), which can be used to defer RMDs on a portion of a Qualified Retirement Account. The deferral can be as short as a single year, or up to age 85. This novel concept recently became even more interesting, as the upper limit was recently raised to $200,000. QLACs are complex planning tools, and should only be exercised following a careful review of income needs. Qualified financial advisors understand the rules, and can assist decision making.

Next week we will continue our year-end planning series, tackling (among other topics) the necessity of paying timely tax deposits during the year. More complex than it seems, depositing sufficient funds with IRS should be measured against over-depositing, which results in an interest-free loan to IRS. We can help.

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