Got year-end financial-planning questions? You've come to the right place. Planners from the National Association of Personal Finance Advisers will be available to answer your questions about retirement, taxes, investing and more on Thursday, December 13, 1pm to 3pm ET.
You can submit questions early by clicking "make comment now." Questions will then be held for approval until Thursday.
We hope to see you then!
Hello and welcome to today's Jump-Start Your Financial Plan live chat with NAPFA planners!
Hello, Richard Frazier CFP with Frazier Financial Consultants here!
Thanks, Rich and David. Glad you could be here.
Matt Illian of Marotta Wealth Management and Lea Ann Knight of Garrison/Knight Financial Planning in Massachusetts are joining us today, as well. Thanks for being here, all!
Hola, This is Matt Illian, CFP® with Marotta Wealth Management in Richmond, Virginia. I look forward to your questions.
We received several questions in advance, so we’ll answer them in the order they came in.
We’ll get started by assigning one question to two advisors at a time.
However, as always planners, feel free to weigh in on any question you see. The more advice, the better!
Matt and David, how about you take this first one from Lydia Jean.
If only we had a crystal ball, Matt!
At this point, I'd wouldn't plan anything of substance being accomplished by the guys in Washington.
And Lea Ann and Rich, here's one from KMM
HI KMM. It's a good time to consider rebalancing if you haven't done it in awhile. When you look at your stocks, some things to consider besides what's up or down: do you have two stocks in the same industry? You probably don't need both. Could you pick a combination of stocks to sell that would minimize your gains or losses, ie. perhaps you need to sell one that has appreciated quite a bit, but you could also sell one at a corresponding loss amount, thus minimizing your taxes. Which ones do you consider to have the best long term prospects, regardless of their current prices?
Hi Kmm, That is a tough question to answer without knowing the stocks and your portfolio. If you were going to sell these in order to capture losses and offset capital gains for this year, it may not be a bad idea. However if you do not regularly rebalance your portfolio I would use this opportunity to make sure that your allocation is correct for you. If you feel that you have too much in stocks, you can sell these stocks and add a good bond or balanced fund in order to hold an allocation thats right for you. This format makes it hard to give you advice about individual stocks to own as our information is limited.
Great questions to ask, thanks Lea Ann.
Alright, ready for our next round of questions?
Rich and Lea Ann, here's one from cmyi
Hi CMYI - I have a few questions to be able to give you a more directed answer - how old is your son? If you didn't sell the two-family to pay for college, would you have to take out loans? do you need the rental income now or in retirement to meet your monthly expenses?
CMYI, I cannot tell what kinds of gains you have in this real estate. If you can refinance either of these to save monthly expenses and help to pay for college this way, that could be a possibility. Its hard to tell whether selling would be a good idea without knowing more. Can you give us more info? As Lea Ann says, age of your child or posibility of loans?
Thanks, Lea Ann and Rich. CMYI submitted her question early, so let's wait to see if she's still here.
Lea Ann and Rich, looks like KMM might have a follow-up question for you, as well. We'll get to that next.
I can take Kmm question while waiting for more info from CMYI.
Sure, Rich. That'd be great.
Lea Ann, feel free to follow-up on KMM's question, as well. Otherwise, we have several more in the hopper!
If you are looking to sell stocks, replace them, and are interested in dividend payers, you should consider a good dividend mutual fund, possibly through Vanguard. They are low cost funds and offer diversification that individual stocks provide.
Hi KMM. I agree with Rich, but if you enjoy individual stocks, I'll point you back to my original thoughts on rebalancing - don't overweight in any one industry, evaluate the long term prospects for the company, not just short term price movements and match up gains and losses to minimize taxes.
Matt and David, you can take this one from Tom C (it's a long one!)
@Tom Carlton: The IRS does not define, "substantially beyond the end of the year" leaving that definition to the tax courts. Traditionally tax courts have used a one-year rule, but other tax courts have used a more complex three part ruling.
The answer is you could probably pay in advance, but it is a tax issue that your CPA or enrolled agent would have to defend.
@Tom Carlton: While Tom wants to accelerate deductions because he is already over the 7.5% threshold, other might like to push deductions into next year where taxes are higher and they are worth more.
Thanks, David. And the good news is you can always undo a Roth conversion if tax rates don't end up going up next year.
Matt, here's a quick one from Helen.