Laying the Groundwork

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While the end of the year always tends to be busy with the holiday season, in the financial world, it also represents a time for high-net-worth individuals to focus on financial planning. End of year planning is important for a myriad of reasons, including taxes, philanthropy, and retirement. Further, 2022 has represented an objectively volatile year for the economy and capital markets alike. Geopolitical strife, supply chain residue from COVID-19, mid-term elections, and red-hot inflation have created a persistent level of uncertainty that has left investors clawing for some sort of relief. However, despite the uncertainty, there are many strategies and proactive measures that investors can utilize to efficiently close out their year. Here are a few:

Required Minimum Distributions

Required Minimum Distributions (RMDs) tend to be top of mind for individuals doing end of year planning. Whether you are the owner of a retirement account or an inherited account, ensuring that the correct distribution is taken can have significant tax consequences.  

The SECURE Act of 2019 mandated that an inherited retirement account must be depleted within 10 years by “non-eligible designated beneficiaries” — heirs who aren’t a spouse, the owner’s minor child, a disabled individual, chronically ill individual, certain trusts, or any other individual not more than 10 years younger than the decedent. Since 2019, there has been confusion as to whether these non-eligible designated beneficiaries must take a RMD each year after the account is inherited or if they must deplete the funds by the tenth year after inheritance. Fortunately, the IRS provided some guidance with the issuance of IRS Notice 2022-53, which states that no RMDs are required for inherited accounts in 2021 and 2022. Thus, inherited retirement account owners need not worry currently, but should speak with their Relationship Manager concerning RMDs for 2023 and beyond.

Tax-Loss Harvesting

Tax-loss harvesting involves selling off investments such as stocks or mutual funds that have not performed in your portfolio and are now worth less than what you bought them for. Subsequently, you can then use these losses to offset any gains that you have in your portfolio. Further, if you have more losses than gains, you can use up to $3,000 of those losses to offset other types of income. Any losses that you have over $3,000 can be carried over to the next year.  

However, those individuals intending to sell an asset solely to realize the loss and then buy it back should be aware of the “wash-sale rule”. The wash-sale rule precludes an investor from deducting a loss if they repurchase a “substantially identical” investment within 30 days. Of note, the wash-sale rule does not apply to cryptocurrencies, so investors should consider taking advantage of this strategy if they have losses in that asset class.

Roth Conversions

Roth conversions allow you to convert funds in pre-tax individual retirement accounts, or other qualified accounts, to an after-tax Roth IRA. You will have to pay tax on the converted money, but the Roth IRA provides tax-free future growth. Upon this transaction, investors should note that converting an entire IRA may bump you into a higher tax bracket. However, conversions can be spread over many years. Correspondingly, a large conversion made within two years of signing up for Medicare may trigger the necessity to pay for the more expensive Medicare Part B. Thus, it is important to consult with your relationship manager to discuss applicability and effectiveness of this strategy. 2022 has presented a great opportunity to take advantage of this strategy because of the depressed stock market. The lower account value translates to a lower tax bill to effectuate the transaction.

Insurance Coverage Review

Reviewing insurance coverage is an item that is often overlooked during end of year planning; however, 2022 has presented an environment where it could prove extremely beneficial. With inflation reaching heights it hasn’t seen in 40 years, individuals have been elated with the rise of their property value but dismayed about the rise in cost of their goods and services.

A byproduct of this is that current insurance coverage amounts may not be adequate to protect against unforeseen events. Be it homeowner’s, life, disability, or long-term care, each category has been affected by inflation to some extent. Ensuring that your coverage amounts adequately meet your needs could very well save an avoidable surprise in the future.  


These are only some of the strategies and measures that individuals use to proactively effectuate their end of year planning. Every investor’s situation is different, and some require a deeper analysis than others.  If any of these strategies are of interest or you if you have any questions, please feel free to reach out to your team at Balentine. We strive to provide guidance on our clients’ full financial picture – including assistance on the above topics and customized healthcare strategy recommendations through our partnership with Bernard Healthcare Financial Planners.  

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