October marks the beginning of an important year-end planning period at our firm. Each fall, we review client accounts to confirm that required minimum distributions (RMDs) have been or are scheduled to be completed before the applicable deadline. We also begin looking carefully for tax-loss harvesting opportunities.
What Is Tax-Loss Harvesting?
Tax-loss harvesting involves selling an investment that has declined in value and using the realized loss to offset taxable capital gains elsewhere in a portfolio. For example, a loss in one holding may help reduce the tax impact of gains generated by another investment, a portfolio rebalancing, or an outside transaction. Unused losses may also provide benefits in future tax years, subject to applicable tax rules.
Of course, realizing a loss should never be done solely for tax purposes. We consider the investment’s outlook, the client’s broader financial plan, wash-sale restrictions, and whether a suitable replacement investment is available. The objective is to preserve the portfolio’s long-term strategy while making thoughtful use of the opportunities the tax code provides.
Why Year-End Planning Starts in October
These annual reviews reflect an important part of our responsibility to clients: attending to the details before they become deadlines. By starting in October, we have time to coordinate distributions, evaluate potential tax consequences, and consult with clients and their tax professionals when appropriate.
Understanding Required Minimum Distributions
Under current law, most individuals must begin taking RMDs from traditional retirement accounts and certain employer-sponsored retirement plans at age 73. A first RMD generally must be taken by April 1 of the year following the year in which the account owner reaches the applicable starting age. Subsequent RMDs must be completed by December 31 each year.
A Proactive Approach to Year-End Wealth Planning
RMD confirmation and tax-loss harvesting are not one-time exercises for us. They are part of the disciplined year-end planning process we complete every year to help clients meet their obligations, avoid preventable penalties, and reduce unnecessary taxable consequences whenever possible.
As always, our goal is simple: to keep each client’s financial plan organized, proactive, and aligned with their best interests.
A Proactive Approach to Wealth Management
Financial planning is an ongoing process. Markets change, tax rules evolve, portfolios move, and individual circumstances change over time.
At FNEX Wealth, we believe wealth management should be proactive rather than reactive. Our team works with clients throughout the year to keep investment strategies and financial plans organized and aligned with their long-term objectives.
Year-end reviews, including RMD planning and evaluating potential tax-loss harvesting opportunities, are part of that broader approach.
The goal is straightforward: address important financial decisions before they become deadlines and help clients maintain a coordinated, long-term financial strategy.
Disclosure: This material is provided for general informational purposes only and should not be considered tax or legal advice. FNEX Wealth does not provide tax advice. Tax rules are complex and may vary based on individual circumstances. Clients should consult a qualified CPA, trust tax advisor, or other appropriate tax professional regarding their specific situation before taking action.
