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End of Year Investment Tax Planning

December brings us the joy of Christmas, but also the beginning of preparation for tax season.  Make sure you have done the things you can do to maximize your retirement assets, gain any available tax benefit, and/or avoid any tax penalty that may be linked to those investments.

Roger Green, MSFS,CFP®

IRAs – First, make sure you have maximized your IRA contributions to take advantage of the increased tax benefits they offer.  Contributions for 2014 may be made through April 15th 2015, and 2015 contributions may be made as of January 1st, 2015.  Note:  Filing an extension on your tax return does not extend the deadline for making your IRA contributions.

The 2014 and 2015 maximum contributions are $5,500 for IRA contributions for those under age 50 ($6,500 for those 50+).  Make sure your contribution amount takes into consideration any prior contributions you have made for the tax year 2014, so you do not exceed this maximum. The vendor holding your IRA is the best resource to verify the amount you have paid for 2014.  

Roth IRAs – Although there are no immediate tax benefits, for those who are eligible a Roth IRA might be the way to go because it provides tax-free withdrawal of contributions later.  A Roth IRA has other benefits over a traditional IRA:  1) you can make contributions to your Roth IRA after you reach age 70 ½, and 2) you can leave amounts in your Roth IRA as long as you live.  Be aware, however, some companies that offer Roth accounts place a surrender fee for mutual fund investments within the IRA for a period of generally up to 12 months, so make sure you intend to leave the money invested for at least one year. .  

A Roth IRA calculator is available at to help determine if you qualify for a Roth.  The broad guideline is that you are eligible at some level if your “gross adjusted income” on your tax return is less than $114,000 filing single, or less than $181,000 filing jointly.  For 2015, those numbers are increasing slightly to $116,000 for those filing single and $183,000 for those filing jointly.  There is some allowance for reduced Roth contributions for those making up to about $131,000-$193,000 depending upon the year and filing status.  

Roth Conversions:   In 2010, guidelines were changed to allow conversion of existing assets from a traditional IRA to a Roth IRA regardless of your Adjusted Gross Income (previously limited to those under about $100,000 in income).  A conversion can lower your future tax bill if you anticipate higher future tax rates.  Keep in mind, however, that converting normally results in a taxable event, and you should have funds outside of your IRA to pay any taxes due upon conversion.  The decision to convert can be complex, and you will need to take into consideration many factors such as assumed future tax brackets, other assets available for retirement, and whether you have the assets to pay for the conversion income taxes.

401(k) Contributions – The maximum contribution is $17,500 for 2014, but it goes to $18,000.00 for 2015.  For those age 50+, an additional $5,500.00 catch-up contribution is permitted in 2014, increasing to $6,000 in 2015.  This brings the age 50+ maximum to $23,000 for 2014 and to $24,000 for 2015.  If your company offers matching employer contributions into your 401(k), make sure you are contributing at minimum an amount that earns you the full employer match. Failure to do so equates to refusing free money from your employer.  Your 401(k) contributions must be made by December 31st each year.  There is a provision limiting the matching money paid by employers into a the 401k of a “highly compensated employee”, and for 2014 that income limit is $260,000, increasing to $265,000 for 2015. 

401(k) Rollovers – Do you have a 401(k) account(s) you left with your prior employer(s)?  Our office can assist you with 401k rollovers to expand diversification options, consolidate multiple accounts, and/or to provide ongoing professional management of your assets.  

SEP IRAs & Solo 401ks – For the self-employed and small business owners, the amount they can save in a SEP IRA or a Solo 401(k) goes up from $52,000 in 2014 to $53,000 in 2015. That’s based on the amount they can contribute as an employer, as a percentage of their salary; the new compensation limit used in the savings calculation is $265,000, up from $260,000.

Required Minimum Distributions (RMD): If you or someone you know reached the age of 70½ at some point during 2014,  you must take a Required Minimum Distribution (RMD) from impacted  retirement accounts.  Failure to take an RMD can result in a 50% IRS excise penalty on the amount of the distribution.

For many of these decisions, the input of a financial advisor and/or a tax professional is recommended.  To inquire about your individual situation or about setting up an individual IRA or a 401k for your small business, please contact our office at 770.931.1414 to schedule a complimentary consultation.  Tune in to “Your Green” aired Saturdays from 3-4PM on WNIV 970 AM or listen live at

This information is not intended to be tax or legal advice, and it may not be relied upon for the purpose of avoiding any federal or state tax penalties.  Please seek tax or legal advice from a professional.

Roger S. Green is a Registered Representative with Cetera Advisors LLC, member FINRA, SIPC, with his office located at 3700 Crestwood Parkway, Suite 140, Duluth, GA 30096.  
For useful information on other financial planning topics, and observations on the market and the economy, please tune in to my weekly radio program, Your Green, aired Saturdays at 3:00 PM on 970 AM or live at  Visit our website at for additional helpful information.  As always, we are here to help.