Year-End Strategies

As 2021 comes to an end and we are filled with the excitement for the holidays, it is important to not forget about your retirement accounts. Take advantage of these year-end strategies for 2021 to minimize taxes and avoid penalties:
RMDs: The deadline for RMDs is December 31. Missing this deadline results in a 50% penalty on the funds not taken. If this is your first year subject to RMD requirements, the deadline is extended to April 1.
Conversions: Take advantage of historically low tax rates by considering converting traditional retirement accounts to Roth accounts. Do this by December 31 to ensure it qualifies as a 2021 conversion.
Charitable Contributions: Charitable contributions are typically limited to 60% of AGI, but this limit is currently suspended. Cash donations of up to 100% AGI are permissible but will return to 60% after 2021.
Leverage NUA: The NUA strategy can result in significant tax savings by utilizing long-term capital gains rates, as opposed to ordinary income tax rates on company shares.
Rollovers: The pro-rata formula can serve as a pitfall or an opportunity for those with after-tax dollars in IRAs. A carefully timed reverse rollover of pre-tax dollars from an IRA to a plan can result in a tax-free conversion.
For information on how these year-end strategies apply to your situation, contact us at (661) 297-7566 or visit www.PiersonWealthManagement.com.
Pierson Wealth Management is located at 28368 Constellation Rd., Ste. 396, Santa Clarita, CA 91355. Securities and advisory services offered through Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency LLC), member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity. CA Insurance Lic# 0C92500.