A Financial Planning to do List before year end

Be one of a kind with Mike's Plan.

It is Wednesday, November 19th, hump day, and this is Mike on the mic for the One of a Kind Financial Show Daily. Did you know that it— there are 44 days until the ball drops? It's the new year is right around the corner. And on the One of a Kind Financial Show this past weekend, Gary Nolan and I spoke about a financial planning to-do list. Before the end of the year. We went over several key things that are critical if you are looking to end the year where— well, financially, there's a lot of things, especially when it comes to taxes, that don't carry over into the new year that must be done by the end of the year, but also some things around looking at your portfolio, taking risk off the table if it's time to do that. But most importantly, just know that we are here for you to help. If there is anything we could do, please text NEWS to 600-700 or follow the prompts from the segment of the radio show that follows.

Enjoy these financial planning things that must be done by the end of the year.

Again, be one of a kind.

A new year brings new rules, new risks, new opportunities. But before we look ahead, we need to finish strong. So whether you're retired or on the doorstep of retirement, this is prime time to get your financial house in order. Let's start with the big one, RMDs, required minimum distributions for retirees. Over the age of 73, this cannot be ignored. What are the risks if you miss an RMD before year end, Mike?

Well, the IRS penalty for missing that required minimum distribution is steep. It's 25% of the amount you should have withdrawn. Now, that's down from what it used to be. It used to be 50%. But guys, the deadline is December 31st. It's not January 2nd or January 5th. It is December 31st. And if that money has not left your account, And it's required to leave your account by that time, not only are you still going to have to pay the tax on the withdrawal when you take it, but the IRS is going to ask you for a little 25% cut of what you take in the form of a penalty. Gary, too many retirees put it off and forget to account for all IRAs and 401s. That's real money left on the table, and it's avoidable with a little year-end prep.

And that's what you'll help your clients with that, Mike, make sure they don't miss them. Am I right?

That's true. Liz Monday on my team is, she's the head of our client services division. She's absolutely phenomenal. We got on a call 2 Saturdays ago, like off hours, right? It's her weekend. She's got 2 young kids at home. But this is such— RMDs are such a critical element of what we do. Because although it is our responsibility, and we take a deep responsibility to make sure our clients don't miss these, ultimately, the responsibility is on clients. But we do it with them. And so we walk through client by client by client by name, made sure the calculations are right so that her and Christina and our whole client service team will be reaching out to our clients to tell them, hey, we have to take this and we don't want you to be penalized.

Right. Absolutely. We're also in a sweet spot for Roth conversions, especially for folks who may have lower taxable income in retirement. Why is now the time to act on that, Mike?

Well, I mean, listen, taxes are on sale. The Tax Cuts and Jobs Act lowered individual income tax rates starting in 2018. They were set to expire in 2025, but this year, the one big beautiful bill extended those tax cuts. Now, according to most everyone who monitors budget numbers for the United States government, everyone says that tax rates have to go up. Why is that? Because our debt to GDP is at a rate that we have not seen since World War II. Back then, tax rates went all the way up into the 90th percentile to help pay off the debt. They did.

Yeah.

Well, here we are again with our ratio at that level and rates at historic lows. The way to cut the debt and the deficit, maybe some tariffs, maybe, but it's going to be with increased rates. And as as soon as Congress gets, you know, as soon as it's all the Democrats, and it will, guys, this is not a political show. I'm just saying what's the truth. As soon as it's all Democrats, right? The rates are gonna go up. And they're not gonna go up for people in the 10% and the 12% bracket. It's gonna go up for people in the 22%, 24%, 32%, 35%, 37% brackets. Now, with that being the case, Roth conversions now makes that money at these low rates, makes that money in the future Non-taxable. So Roth conversions today are so critical to pay. If you're in the 22% bracket, at a minimum, we go up to the top of the 22%. Maybe we go up to the 24%. But that little bit that we pay in tax today will save you before tax rates go up in the future.

Mm-hmm. The show is the One of a Kind Financial Show. I'm Gary Nolan, your consumer advocate. The phone number is 800-748-1838. 800-748-1838, or text the word IDEAS to 600-700. And as we get closer to the end of the year, charitable giving is always on people's mind. But for retirees, there's a savvy way to do it. What is a qualified charitable distribution and how does it work, Mike?

Well, a qualified charitable distribution is a payment directly from your IRA to the charity. Now, you have to be over 70½ years old to do this. But if you're given money from your checking account, right? And you've got this money set in an IRA, you might as well keep the money in your checking account because that money has already been taxed and use the money in your IRA to make a tax-free payment to charity.

Yeah.

The good news for that too, by the way, Gary, is if you're, if, if you have to take RMDs, those gifts to charity from your IRA as qualified charitable distributions, not only still go tax-free to your— the charity you choose, but they also count as your required minimum distribution.

Right.

So it's one of the most tax-efficient ways for retirees to give, and it's a great way to turn generosity into strategy.

Terrific. All right, let's talk about portfolio cleanup. Year-end is a natural time to rebalance. What mistakes should retirees avoid when adjusting their investments?

Uh, Gary, if you look at the stock market over this year, right, the S&P 500 has 500 stocks in it. Most people would think because the S&P 500 is at its all-time high, that all 500 stocks are also at their all-time high, but that's just not the case. There's very few stocks that are at its all-time high. There's many parts of the S&P 500 that are down. And so we don't want to chase performance or we don't want to dump losers out of emotion. Instead, we rebalance based on your risk tolerance and retirement income plan. We watch out for capital gain distributions from mutual funds and taxable accounts. And if you own some of those stocks that are lower, where there's a loss in them, we could use some of those losses to offset some of your gains, right? That will ultimately reduce taxes. And that gets away— that helps you get away from the hidden costs that taxes bring that just many people miss. So tax loss harvesting and portfolio cleanup are things that we do this time of year to help our clients.

Mike, tell us about the One of a Kind Financial Plan.

Oh, wow, Gary. I mean, there's so much here we can talk about too. So those who are listening now, we missed healthcare as a big ticket item. We didn't talk about contributing to HSAs. We didn't talk about end of the year zooming out, and we didn't talk about faith and legacy lens. And if you want to know more about those, you have to contact us, right? Because cleaning up for this end of the year is so big. It's a natural part of the one-of-a-kind financial plan because the one-of-a-kind financial plan is a dynamic plan that adjusts based off to your lifestyle because it's all about you and about the market conditions. So if you want help with taxes, retirement income, investment, long-term care, and legacy, you need to call today, right? We have, as Gary mentions, we have limited spots available and every weekend they have been filling up. The people who call early get on my calendar. Folks, we are helping people save hundreds of thousands of dollars. We're helping people get their portfolio in the right place. And most of all, we're helping people sleep at night. Gary, do you want to tell people how to get in contact with us?

800-748-1838. 800-748-1838. Or text the word ideas to 600-700.

Thank you again for listening to the One of a Kind Financial Show Daily. I've been your host, Mike Milligan. If you enjoyed the segment that you just listened to, I invite you to connect with us on Amazon. Google The One of a Kind Financial Plan. It's a bestselling book in the personal tax category, and I invite you to do that. Number 2, if you feel like you need more education when it comes to your own personal financial planning, we have a course that's offered through Old Dominion University in Norfolk, Virginia. It's offered virtually, and it's a self-paced course called Personal Financial Planning that I helped develop and I teach. It is 6 sessions, 90 minutes each, and full of recordings for you that you can start and stop based on what you need. It goes through the psychology and philosophy of money, the cash management, budgeting, and debt management. We talk about insurance, whether it's property and casualty like your homeowners, autos, renters, to the type of insurance insurances you work on at, or you need to replace the biggest asset you have, which is your income. Then we move over and talk about, do a real big investment dive into the difference between mutual funds and ETFs. We go all the way from crypto down to individual stocks and bonds from an academic standpoint. Then we look at retirement planning, tax planning, long-term care, and legacy. Ultimately, with the idea that you can build a one-of-a-kind financial plan for yourself. Ultimately though, what it does is it equips you with knowledge that if you're ever in a conversation with A financial advisor or a financial planner, you know the questions to ask. So I invite you to reach out to us. You can go to MikeMilligan.com under the Educate tab and see how to register for that. We also put some resources behind that on school.com in our private closed group where you can ask questions and learn more. As always, just remember that I am an investment advisory rep not only with One Oak Financial but also Advisory Alpha LLC. Ideas by Mike doing business as One Oak Financial, Mike Milligan LLC, and Advisory Alpha LLC are unaffiliated entities, and. All opinions expressed by me and Gary on the One of a Kind Financial Show and me on the One of a Kind Financial Show Daily are purely my opinions and does not reflect investment advice. Please consult with a licensed financial professional before making any decisions. Till next time, this has been Mike Milligan.

Be one of a kind with Mike's plan. Innovation, growth, take a stand. Visibility, strategy, take the lead. Transformation's yours, fulfill the need. Mike's got the way. To help you rise and stay. Leadership impact you'll find in your one-of-a-kind mind. Be one of a kind. Take the flight. Mike's the guide, you'll shine bright. Mike's the guide, you'll shine bright.