Smart Year-End Investing Moves

Photo by tuchodi

From the November 2010 newsletter:

As you feast on turkey and Black Friday sales this weekend, you may wonder what investing tasks you need to take care of before year-end. Okay, that’s not going to happen, but here’s a list anyway. Happy Thanksgiving!

All Investors

  • If you expect your 2010 tax rate to be lower than usual (due to starting a business, unemployment, attending school, etc), converting IRAs and old 401k’s into a Roth IRA could be a smart move. The deadline to convert is December 31.
  • An easy way to reduce taxes is to realize capital losses in taxable accounts (“tax loss harvesting.”) You can sell investments that have dropped in price and replace them immediately with something similar, but not the same. Your portfolio remains effectively the same, but now you have a tax deduction. The deadline to sell is December 31.
  • If you are looking to sell appreciated investments within the next few months, you should consider selling them this year instead of next because the tax rate on capital gains may go up in 2011.


  • If you plan on paying for your child’s college education, 529 plans are a great way to save for those expenses. The deadline to open accounts and make contributions for 2010 is December 31.
  • Already have a 529 account opened and funded? Remember to use your annual trade by December 31 if you are not using an age-based option.

Business Owners / Self Employed Workers

  • If you are self-employed or own a business without full-time employees, Individual 401k’s are a great way to save for retirement. The deadline to set one up is December 31.
  • Depending on how your business is taxed, the deadline for employee contributions to an Individual 401k can be as early as January 15, 2011. Speak to your accountant for your specific limits and deadlines.


  • Make your donations by December 31 to deduct them for 2010. You can even donate appreciated assets to avoid the capital gains tax.
  • If you want to donate in 2010 to get the tax benefits, but you are not ready to decide on a charity, you can open a donor-advised fund. You get the tax deduction when you contribute, and you can decide which charity gets the money later.

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