As we approach year-end, here are some reminders for tasks that should be considered before December 31:

· Take required minimum distributions (RMDs): Due to changes made in The Secure 2.0 Act of 2022 that took effect on January 1, 2023, the age you must take minimum distributions from your tax-deferred retirement accounts increased from age 72 to 73. One exception: if you are still employed at age 73 or older and contributing to a 401(k) or similar retirement plan, you do not need to include the employer-sponsored plan in your RMD calculation as long as you are not a more than 5% owner in the business.

· Qualified charitable distribution (QCD): If you’re 70½ or older, you can donate up to $100,000 to a charity directly from your IRA using a QCD. You won’t receive a tax deduction for the donation, but the gifted amount can be used to satisfy all or part of your RMD without adding to your taxable income.

· Charitable donations: If you are charitably inclined, think about the best method to maximize the tax efficiency of your gifts. Donations are deductible for donors who itemize when filing their income tax returns. Overall deductions for donations to public charities, including donor-advised funds, are generally limited to a percentage of adjusted gross income (AGI). The limit for cash gifts is 60% of AGI, while the limit on donating appreciated non-cash assets (e.g. stocks) held more than one year is 30% of AGI. Contribution amounts in excess of these deduction limits may be carried over up to five subsequent tax years.

· Gifting to heirs: You can give up to $17,000 per person ($34,000 per couple) to an individual without eating into your lifetime estate and gift-tax exemption. This won’t reduce your taxable income for the year, but it will allow you to strategically transfer wealth to your heirs tax-free.

· Maximize your 401(k): Contributing the maximum amount to your tax-deferred employer-sponsored retirement plan can help reduce your taxable income for the current year. In 2023, the maximum contribution for 401(k)s and similar plans is $22,500 ($30,000 if age 50 or older).

· Contribute to a Roth 401(k): If your employer offers the option and you haven’t maxed out your traditional 401(k), you can make after-tax contributions to a Roth 401(k) up to the $22,500 limit ($30,000 if age 50 or older)—minus whatever you might have contributed to your traditional 401(k) before year-end.

· Consider a Roth conversion: If your income exceeds Roth IRA contribution limits, you can convert pretax savings in a traditional IRA account to a Roth IRA in order to benefit from tax-free withdrawals in retirement. Before making a Roth conversion, it’s important to know which tax bracket you fall into to help minimize the tax liability and maximize the benefit of the conversion.

· Harvest losses: The end of the year is a great time to make sure your portfolio is still aligned with your goals. If this year’s market volatility has left you with losses, you can use them to offset any realized capital gains for 2023. To employ this strategy, identify and sell positions at losses of equal value to your gains. If you have more losses than gains, you can offset up to $3,000 of ordinary income.

Individual investment positions detailed in this post should not be construed as a recommendation to purchase or sell the security. Past performance is not necessarily a guide to future performance. There are risks involved in investing, including possible loss of principal. This information is provided for informational purposes only and does not constitute a recommendation for any investment strategy, security or product described herein. Employees and/or owners of Nelson Capital Management, LLC may have a position securities mentioned in this post. Please contact us for a complete list of portfolio holdings. For additional information please contact us at 650-322-4000.