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NOW is the Time: Tax Planning for the Rest of 2024

NOW is the Time: Tax Planning for the Rest of 2024

May 15, 2024

Now is the time for 2024 tax planning because it’s early enough to have effect in time for this year’s tax filing. 

With your tax advisor and financial advisor, you should consider ways to achieve tax-conscious rebalancing: protecting potential growth while minimizing downside risk.

  • Assess tax situations / scenarios with a view to what will differ from 2023.
  • In many cases tax and financial planning for the current year can affect future years.
  • Consider taking steps now to reduce future Required Minimum Distributions (RMDs), such as making a Roth conversion, buying a Qualified Life Annuity Contract (QLAC) or taking a Qualified Charitable Distribution (QCD).


Think ahead about Income Changes  

Projected Income. Your projected income for the year can affect a wide range of tax planning tasks. Determine whether your ’24 income will be substantially higher or lower than in ’23 and if so, in what ways? Examples:

  • Changes in amount of investment income
  • Employment compensation
  • Whether concentrated holdings in a company’s stock could trigger a tax hit by changing position
  • For lower income situations, it may make sense to draw from a traditional IRA or 401k to cover current year expenses so as to reduce the impact of RMDs in future years. This enables you to pay taxes now while income is low and save taxes later with reduced RMDs.


Think ahead about Retirement Income Planning

Whether you are in retirement or approaching that time, balancing or offsetting the impact of Required Minimum Distributions (RMDs) and avoiding excise taxes, is a strategic annual consideration.

  • A Qualified Charitable Distribution (QCD) now can be a tax-efficient way to reduce future RMDs.
  • Purchasing a Qualified Longevity Annuity Contract (QLAC) is a smart strategic move. Money to buy the annuity can be excluded from RMD requirements until payments begin (at age 85), while those payments serve as deferred retirement income.
  • Under Secure Act 2.0 a new rule allows a surviving spouse to wait until their deceased spouse would have been required to begin RMDs (age 73 or 75). The surviving spouse has options for choosing how the RMDs are calculated. This can result in lowering RMDs while a deceased spouse’s IRA assets can remain invested.
  • A ROTH conversion can offer tax diversification in retirement while reducing RMD requirements.
  • A ROTH can also be an effective tax planning tool for clients with non-spousal beneficiaries under new Secure Act rules. While a ROTH conversion will trigger a current tax year liability, one can be scheduled in years in which income is lower (or anticipated to be so) than normal.
  • A backdoor ROTH conversion, if you have little or no funds in a traditional IRA, could result in little or no taxes to be paid.


Think ahead about Charitable Giving Opportunities

You can donate appreciated shares (in asset classes that need to be shrunk) to your preferred charity.

  • This reduces the balance in that asset class, and affords you a charitable deduction if you’re able to itemize and there are no capital gains taxes to pay. This strategy can also be used for a donor-advised fund.


Any strategic analysis should be revisited yearly, especially as you near retirement. Let your Strategic Stewardship advisor guide you through life’s transitions. We collaborate with you to regularly weigh options to adjust your portfolio as and when it’s necessary to achieve your goals.

*Adapted from Roger Wohlner, ALM Think Advisor 3/14/2024