You’re likely already maxing out your employee contribution to the company’s retirement plan. (If you’re self-employed, make sure that you have the right kind of retirement plan for your business to capture the largest contribution you’re able to make.) But don’t stop there.

Have you considered making:

• HSA contributions if you have a high deductible healthcare plan?
• 529 contributions? You can change the beneficiary of a 529 to yourself in many instances.
• After-tax contributions to your 401(k) if applicable? Some employer retirement plans allow you to contribute additional funds on top of the employer match and your employee deferral contributions.

Critical questions to ask yourself include:

• What tax-deferral opportunities are specifically available to me?
• Can I add after-tax funds to my employer-sponsored retirement plan?
• Am I maxing out all my potential contributions?
• Is there a financial professional who I feel confident discussing these contribution strategies with?

Do you have embedded capital gains in your investments?

Harvesting them now under a favorable tax regime where the top rate is 20% could be beneficial if capital gains lose their favorable tax treatment in the near future.

The top ordinary income tax rate could rise up to nearly 40%... just about double the current highest capital gains rate.

Taxes are just one part of your overall investment picture, but it could offer an opportunity to make tactical investment changes where prudent.

Critical questions to ask yourself include:

• Should I consider paying capital gains taxes now?
• Do I need to make some investment changes to my portfolio?
• Is it worth freeing up some cash to make purchases I’ve been considering?
• Am I in touch with a financial professional who can consult with me about my capital gains exposure?

Currently, savvy investors who have the ability to use a mega-backdoor Roth are doing so: by adding after-tax contributions to their 401(k)s and then converting to Roth IRAs.

This strategy could be eliminated forever under future administrations, so if a mega-backdoor Roth strategy sounds interesting, consider it before it’s too late.

Not all 401(k) plans allow for this strategy. However, if you have pretax money that you put in any type of retirement account, you may still want to convert some of it to a Roth (in moderation). The entire amount of the conversion is taxable income to you, but it may still make sense in view of your overall tax strategy.

• This could be a good time to convert (with a lower tax rate) since tax rates may rise in the near future.
• Consider how much you can convert without pushing yourself into a higher tax bracket.
• Reducing your pretax money also means that you’re reducing your future Required Minimum Withdrawals (RMDs), since Roth IRAs aren’t subject to these taxable withdrawals.

Critical questions to ask yourself include:

• Do I have access to additional after-tax contributions to my employer-sponsored retirement plan?
• Does the mega-backdoor Roth technique make sense for my overall portfolio?
• Do I have a financial professional who can help me navigate Roth conversions in a smart way?

The standard deduction for taxpayers who are married filing jointly is $27,700 and $13,850 for single filers in 2023.⁴ That puts the bar a little higher for taking itemized deductions, but you can combine a number of deductions together to make it past the standard deduction threshold.

• Bundle several years’ worth of charitable deductions into one year rather than spreading them out over several years.
• Accelerate medical procedures into this year rather than wait until next year, as long as you’ll meet the 7.5% of AGI floor for medical expenses.
• Items such as long term care insurance premiums and home modifications for aging in place are medical expenses that may help you reach the 7.5% AGI.
• Pay next year’s property taxes (as long as they’re billed before December 31).

Critical questions to ask yourself include:

• Will I be able to reach the floor of 7.5% AGI for medical expenses this year so I can deduct them?
• What other deductions could I bundle along with my charitable contributions?
• Are there other deductions that I could capitalize on this year?
• Do I know a financial professional who can guide me through a strategy for bundling deductions?

You might not want to think about it this way, but it’s possible that your current tax bracket is the lowest it will be for the near future, and possibly even later in life. If that’s the case, then it makes sense to maximize the amount of income you have this year without pushing your income into the next higher tax bracket.

Yes, it could mean paying more in tax this year than you would otherwise. But paying tax on the highest income in your current tax bracket could mean less of a tax exposure compared to when your tax bracket (and marginal tax rate) are higher.

It’s critical to carefully coordinate a strategy with your CPA and financial professional to avoid unforeseen complications.

You might want to consider these potential strategies:

• Roth conversions
• Capital gains harvesting (only if they make sense in light of your overall investment strategy)
• Accelerating income into this year

Critical questions to ask yourself include:

• Should I be concerned about my tax rates increasing in the future, since not all taxpayers will face higher taxes in the next administration?
• Does it make sense to fill up my income tax bracket this year?
• Do I have a strategy for maximizing what could potentially be my lowest tax rate for several years to come?
• Is there a financial professional in my circle who can help me analyze my tax situation?