Year-end Portfolio Housekeeping Checklist

May 2, 2018

By Tim Courtney, Chief Investment Officer

The end of the year brings with it lots of items to check off our to-do list: Spend time with family and friends, attend parties, purchase and wrap gifts, decorate your home…the list can seem endless!

Investments may also require some attention before we close the book on 2017. Most of these potential actions are applicable for taxable accounts, such as individual, joint and trust accounts, as opposed to IRA and retirement accounts, although some planning can be done for IRAs as well.

First, while we conduct tax-loss harvesting1 throughout the year, the practice garners the most attention at the end of the year. We want to make sure we offset gains – which are subject to capital gains taxes – with losses when we have them.

Tax loss harvesting is one tool than can lead to better after-tax returns. When we find losses we can book, we will sell those positions at a loss and enter an alternative position for 31 days. In most cases, we will reinvest back in the original position after 31 days.

It’s something we do every year, but it is likely that tax-loss harvesting trades will be minimal this year. Markets have generally performed2 well with such small pullbacks that targets for tax-loss harvesting are few. 2017 has seen meaningful growth with some exceptions, while 2015 and the first quarter of 2016 which were broadly weaker and tax loss harvesting more common3. All in all, we much prefer the former.

In addition to tax-loss harvesting, there are some other year-end items on our to-do list.


For assets that were loss harvested and reinvested back in the early part of 2009, it’s not uncommon to see those positions having gains of 100 or 200 percent or more since then.


If a position has a meaningful gain, investors stand to benefit by using it for charitable giving in place of a cash donation to charity4. With markets near all-time highs5, this can make sense especially if you were planning on making a gift to the charity anyway. It’s much more advantageous to gift appreciated shares than to give cash, and nearly all charities will accept a gift of stock or fund shares. Cash that was earmarked for charitable giving can then replace the appreciated investment position in an investor’s account.


Along with gifting appreciated securities at year-end, December can be a good time to evaluate whether an investor would be better served to move future years’ charitable giving to 2017. This may make sense for individuals who anticipate 2017 being a high tax year. This strategy becomes even more attractive if 2018 is lining up to be a lower tax year than 2017.


Lastly, we want to make sure we’ve taken any required minimum distributions (RMDs) from certain retirement accounts such as rollover IRAs and Inherited IRAs. If you turned 70 ½ this year, you generally should take your first RMD before Dec. 316.


You might hear about some actions your advisor is taking on your behalf before the end of the year. If you have any questions in the interim, please don’t hesitate to call or email your advisor.








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