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2023 Year-end Financial Reminders

by Maia Babbs

2023 went by quickly! As we near year-end, please note the following tax deadlines and financial housekeeping to-do items. 

As we move into 2024, note that major changes could be coming to the personal tax landscape over the next several years.  Several key rules enacted under the Tax Cuts and Jobs Act in 2017 are scheduled to sunset at the beginning of 2026, including the legislation’s temporary increase in the lifetime gift and estate tax exemption (remember the exemption for an individual was increased from $5.49mm to $12.92mm in 2017, and for couples the tax-free transfer amount was raised to $25.84mm).

Also, changes in the deductibility of an individual’s qualified business income and state and local tax, as well as a reversion of the top marginal tax rate back to 39.8% are scheduled for 2026 unless Congress enacts new legislation.  We’ll be keeping you up to date on these important changes over the coming year. 

Maximize Contributions to Tax-Advantaged Retirement Accounts

  • Ensure that your company-sponsored retirement plan contributions are maxed out and that the plan is invested in line with your financial goals.  The 2023 maximum 401(k) contribution is $22,500, and if you’re over 50 an additional $7,500 “catch-up” contribution is possible.  The deadline for 401(k) contributions is December 31, 2023. For IRAs, the maximum contribution is $6,500, with an additional $1,000 “catch-up” if you’re over 50.  Note that while year-end is a good time to review your plan, the actual deadline for IRA contributions is Tax Day of the following year, in this case April 15, 2024.
  • Remember to establish and/or contribute to Custodial Roth IRAs for working children or grandchildren.  Contributions can be made on a child’s behalf up to the lesser of the child’s earned income or $6,500 in 2023, whichever is less.  Note that this contribution would count as part of the gift tax exemption limit.

Take the RMD, or “Required Minimum Distribution”, from Your Individual Retirement Account (“IRA”) If Necessary

  • When you must take an RMD from your Individual Retirement Account is based on your age, and in 2022 the SECURE 2.0 Act raised the required age to 73 for Required Minimum Distributions (“RMDs”).
    • If you turned 73 in 2023, you must take an RMD from your Traditional, SEP or Simple IRA by April 1, 2024.  Subsequent RMDs must be taken by December 31st.  RMDs also apply to pretax and Roth 401(k) accounts in 2023, however different timing may apply if the account owner is still employed.
    • Inherited IRAs – the RMD (if not taken by the deceased) must be taken by December 31, 2023.  In some cases, extensions and waivers may be applied for. The rules for Inherited IRAs are complex, and it is important to consult with your CPA to ensure that the RMDs are distributed correctly and before year-end.
    • Note that RMDs for Roth IRAs are not required
  • Because of the changing rules, and their complexity, penalties had been waived for several years on underpaid or unpaid RMDs. However, penalties have been reimposed and they are substantial: 25% on any amount not withdrawn, which can (if appealed successfully) be reduced to 10%.

Review Charitable Gifting Options, Ensuring That End-of-year Deadlines Are Met

Charitable giving not only supports a good cause, but it can also have tax advantages.  Be sure to consult with your tax professional and note that most custodians have mid-December deadlines.

  • Donation of appreciated stock:  should you have stock that has gone up in value significantly and wish to give to a charity, a potential strategy is to gift appreciated security rather than simply cutting a check. 
  • Qualified Charitable Distribution (QCD): if you are required to take a RMD from your IRA, it can increase overall taxable income and your tax obligation.  In some cases, the RMD can shift you into a higher tax bracket. A Qualified Charitable Distribution, or QCD, is a direct contribution from your IRA to a charity and can offset some or all of your RMD.   Note that the maximum contribution is $100,000 and a deduction is not allowed, but you won’t have to include the amount of the QCD in your taxable income.

Other Types of Gifting

  • Gift tax exemptions: Should you wish to make cash gifts, the 2023 annual federal gift tax exclusion is $17,000 each without counting against the 2023 $12.92mm individual lifetime exemption ($24.12mm for married couples).  Married couples can gift $34,000 tax-free.  Note that gift checks should be cashed by year-end to ensure they count in the 2023 tax year.  In some cases, an IRS Form 709 form must be filed, even if no taxable gift has been incurred. 

529 Contributions for Education Savings

For Colorado taxpayers, contributions to CollegeInvest savings accounts are eligible for a Colorado state income tax deduction (refer to, so it is best to make contributions by year-end.  Note that there is the flexibility to “frontload” 5 years of a gift, which may make sense for you depending on your tax situation.  In general, 529 deductibility rules and deadlines will vary by state.

  • New: In 2024 529 to Roth IRA transfers will be allowed for up to $35,000 of unused 529 funds. The 529 must be in existence for 15 years, with contributions and earnings for 5 years.

Tax Deadlines

  • Key Dates:
    • Due date for RMDs if you turned 73 in 2023 is April 1, 2024
    • Due date for 2023 individual tax returns is April 15, 2024
    • Last day to make 2022 contributions to Roth and traditional IRAs and HSAs is April 15, 2024
    • Estimated payment dates for 2024: January 16, 2024 for Q4 2023, April 15, 2024 for Q1 2024, June 17, 2024 for Q2 2024, and September 16, 2024 for Q3 2024.
    • Deadline to file extended individual 2023 tax returns: October 15, 2024
  • Review and adjust paycheck withholdings and payments:  major events or life transitions, including marriage, divorce, having a child or death, older dependents, may impact withholdings

Tax Loss Harvesting  

While we never recommend that taxes dictate investment strategy, in some cases tax loss harvesting, or selling securities for less than their cost basis to offset other realized capital gains, can make sense.   There are restrictions around tax loss harvesting and should be done in consultation with your tax professional.

Review and Maximize Employee Benefits

  • Review compensation and other benefits during open enrollment period: Review your compensation, including any incentive plans.  As well, review and adjust your additional corporate benefits including health insurance, life insurance, disability insurance and FSA, as needed.
  • Spend Through Use-It-or-Lose-It Accounts: Check deadlines with your FSA; you may have a grace period to use any funds contributed in 2023, after which you would forfeit the ability to roll the funds over. 
  • Maximize your HSA contribution:  The maximum HSA contribution in 2023 for individuals is $3,850, $7,750 for families and an additional catch-up contribution of $1,000 possible if the individual is over 55, and the deadline for HSA contributions for 2023 is April 15, 2024. These are incredible accounts with triple tax advantages:  tax deductibility, tax-advantaged growth and tax-free when withdrawn and used for qualified medical expenses. 
  • Look out for “Emergency Savings Account” benefit in 2024.  These new accounts, intended to facilitate emergency savings, are linked to 401ks and can be employer-matched.

Please let me know if you have any questions and have a wonderful holiday season!

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.

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