Year-End Financial Planning Topics to Discuss with Clients


With the end of 2022 fast approaching, year-end financial planning conversations with clients are likely already starting to take shape. It’s been a year of interesting developments—from pandemic-related relief that has come and gone to the emergence of new programs around student loan debt—and clients will be looking to you to help navigate these changes. Having this checklist in your back pocket can make your planning conversations with clients more productive and help them stay on track.

1. Increase Retirement Contributions to the Max

Workplace accounts. Encourage clients to consider maximizing contributions to their workplace plans and to take full advantage of any employer match benefit. For 2022, the maximum employee deferral for 401(k), 403(b), and 457 accounts is $20,500, and individuals ages 50 and older can defer an additional catch-up contribution of $6,500. For SIMPLE IRAs, the deferral remains $14,000 and the catch-up is $3,000.

Traditional IRAs. Maxing out contributions to a traditional IRA is another option. For 2022, the contribution limit is $6,000 or 100 percent of earned income, whichever is less, with a $1,000 catch-up for clients ages 50 and older. Modified adjusted gross income (MAGI) limits for contributions to traditional and Roth IRAs increased in 2022, so be sure to review MAGI eligibility thresholds.

2. Spend FSA Dollars and Contribute to HSAs

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If permitted under an employer’s plan, an individual can carry over unused health flexible spending account (FSA) amounts, with a maximum carryover amount of $570. Although the rollover option applies to the employer’s plan year rather than the calendar year, this year-end assessment is a good reminder to make sure your clients are on track. In addition, clients with dependent care FSAs can save as much as $5,000 (family limit) or $2,500 (married filing separately) in 2022.

Now is also a great time to discuss maximum health savings account (HSA) contributions with clients who have high-deductible health plans (HDHPs). Although this can be a fairly complex planning area, in general, here’s how HSA limits work: In 2022, the maximum contribution for an individual HSA is $3,650, and the maximum for a family HDHP is $7,300.

Plus, clients ages 55 and older can contribute an additional $1,000. Don’t forget to discuss prorated vs. “last month rule” contributions for clients who had an HDHP for part of 2022.

3. Assess Marginal and Capital Gains Tax Matters

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Clients on the threshold of a tax bracket may be able to put themselves in the lower one by deferring some income to 2023. Here are a few thresholds to keep in mind:

  • 37 percent marginal tax rate: Taxable incomes exceeding $539,900 (individual), $647,850 (married filing jointly), $539,900 (head of household), and $323,925 (married filing separately)

  • 20 percent capital gains tax rate: Taxable incomes exceeding $459,750 (individual), $517,200 (married filing jointly), $488,500 (head of household), and $258,600 (married filing separately)

  • Additional Medicare tax: For clients with W-2 or self-employed income above certain MAGI thresholds, total Medicare taxes will be 2.35 percent and 3.8 percent, respectively

  • 3.8 percent surtax on investment income: The lesser of net investment income or the excess of MAGI greater than $200,000 (individual), $250,000 (married filing jointly), $200,000 (head of household), and $125,000 (married filing separately)

4. Review and Rebalance Portfolios

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Year-end financial planning should include a review of capital gains and losses for your clients and an assessment of whether it’s time to rebalance client portfolios. This process may reveal tax planning opportunities, such as harvesting losses to offset capital gains.

5. Tap into the Tax Benefits of Charitable Giving

box and heart

Charitable contributions donated directly to a qualified charity or a donor-advised fund can help achieve a federal tax deduction. Keep in mind, however, that this strategy will only be beneficial if itemizing deductions. So, it’s worthwhile for clients to discuss with their tax professionals if their charitable contributions, in addition to other deductions, will surpass their standard deduction.

Deductions on contributions to donor-advised funds are capped at 60 percent of AGI for cash and 30 percent of AGI for long-term appreciated securities.

Qualified charitable distribution (QCD) rules haven’t changed, so clients older than 70½ can make a QCD of up to $100,000 directly to a charity; married joint filers may exclude up to $100,000 donated from each spouse’s IRA. Further, a QCD can be beneficial from a tax perspective, as it reduces taxable income while also satisfying the RMD requirement.

6. Prepare a Strategy for Stock Options

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Alternative minimum tax (AMT) exemption limits increased in 2022 to $75,900 for single tax filers and $118,100 for married joint filers. Depending on AMT projections, clients may want to wait until January 2023 to exercise incentive stock options.

7. Plan for Estimated Taxes and RMDs

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  • A retiree’s first RMD must be completed by April 1 of the year after they turn 72. After the first year, they must satisfy their annual RMD distribution by December 31 for every ensuing year. If a taxpayer chooses to delay the first RMD until April 1, they will need to take another RMD before year-end (i.e., essentially two RMDs in that first year, if they delay).

  • Clients who may be subject to an estimated tax penalty can request that employers (via Form W-4) adjust their withholding to cover shortfalls. The IRS tax withholding estimator can be a valuable resource here. They could also explore using Form 1040-ES to make their estimated quarterly payments for income that’s not subject to withholding.

8. Get Ready to Repay Student Loans

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Student loan payments are set to restart at the commencement of 2023. Under the Biden administration’s one-time student loan debt relief plan, payments would be reduced to 5 percent of discretionary income for most undergraduate loans. More information on this plan will be announced in the coming days and weeks. To get the latest, your clients can consult this helpful fact sheet and sign up for updates on the U.S. Department of Education website.

9. Evaluate Estate Plans

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It’s always a good idea to review estate plans as part of year-end financial planning. Depending on a client’s net worth, establishing a defective grantor trust, spousal lifetime access trust, or irrevocable life insurance trust may be an effective strategy to reduce estate tax exposure.

While you review a client’s estate plan, be sure to update beneficiary designations and review trustee appointments, power of attorney provisions, and health care directives.

Be a Trusted Resource and Guide

Although this year-end financial planning checklist covers a lot of ground, it’s intended to serve as a springboard for your planning conversations with clients.

You’ll have a great starting point to talk through high-level issues and deadlines that are most relevant to them and have the opportunity to reach out proactively—and offer to collaborate with—CPAs, attorneys, and other professionals they work with. These planning conversations are just one of the many opportunities you have to demonstrate the value you deliver and deepen your client relationships.

Of course, it’s likely that many clients will have more complicated issues to consider. Learn how having a team of experts at your fingertips could be a game changer for your practice and your clients.

Commonwealth Financial Network® does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation. Third-party links are provided to you as a courtesy and are for informational purposes only. We make no representation as to the completeness or accuracy of information provided at these websites.

Editor’s Note: This post was originally published in October 2021, but we’ve updated it to bring you more relevant and timely information.

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