As the tax season draws near, it presents a perfect opportunity for both business owners and employees to refine their financial strategies and ensure a brighter, more efficient fiscal future. Whether it’s exploring advanced tax planning, making the most of employee benefits, or simply understanding the wealth of options at your disposal, being informed is the first step toward financial empowerment. In this article, we dive into some key tax planning insights, aiming to navigate this tax season with ease and set the stage for a year filled with prosperity and informed financial decisions.
For Business Owners:
Surround yourself with a team of professionals, including a tax professional and financial advisor, to explore tax deductions, credits, and strategies to fit your business into your overall financial picture.
Consider retirement savings options like SEP IRAs for self-employed individuals or SIMPLE or 401(k) plans if you have employees. Consult with your professional team to choose the best option for your situation.
Restricted Stock Units (RSUs) for Employees:
Restricted Stock Units (RSUs) are a form of stock compensation given by employers, which vest over time. Understanding your RSUs’ vesting schedule is critical, as it dictates when you can sell or hold your shares. Deciding whether to keep vested shares or sell them involves assessing the company’s potential growth against immediate financial gains and considering the tax implications of each choice.
Due to the complexities of RSUs, including their potential impact on your taxes and investment portfolio, consulting with a financial professional is highly recommended. An advisor can guide you through the intricacies of your RSUs, helping you to integrate them into your overall financial strategy effectively. This way, you can make informed decisions that balance immediate benefits with your long-term financial objectives, optimizing the value of your RSUs in alignment with your personal goals.
Employee Stock Purchase Plan (ESPP):
An Employee Stock Purchase Plan (ESPP) allows you to buy company stock, typically at a discounted rate, which can be a great financial opportunity. Key considerations include the discount rate, its fit within your financial plan, and its effect on your investment diversity. Before participating, assess how the plan impacts your financial goals and risk tolerance. Consulting a financial professional is beneficial for navigating ESPPs’ tax implications and integrating this investment into your overall strategy efficiently. Deciding on ESPP participation should align with your broader financial health, and professional advice can ensure it complements your portfolio effectively.
Rollovers: Combining Retirement Accounts:
Consider consolidating multiple 401(k) or 403(b) accounts from past jobs into one account for easier management and to simplify future required minimum distributions. Though not mandatory, consolidation can streamline your financial management.
If you are considering rolling over money from an employer-sponsored plan, you often have the following options: leave the money in the current employer-sponsored plan, move it into a new employer-sponsored plan, roll it over to an IRA, or cash out the account value. Leaving money in a plan may provide special benefits including access to lower-cost investment options; educational services; potential for penalty-free withdrawals; protection from creditors and legal judgments; and the ability to postpone required minimum distributions. If your plan account holds appreciated employer stock, there may be negative tax implications of transferring the stock to an IRA. Whether to roll over your plan account should be discussed with your financial advisor and your tax professional.
Pension Plans:
If you’re entitled to a pension plan, explore all payout options carefully to choose the best option for your financial situation. Discuss with your financial advisor to fully understand how your choice integrates with your broader financial goals.
Engaging with knowledgeable professionals and staying informed about your financial options allows for informed, strategic decisions that support your long-term financial success. Proactive planning is key. For personalized advice and to integrate these tax planning tips into your financial strategy, consider reaching out to financial professionals like the Blakely Financial team.
If you are considering rolling over money from an employer-sponsored plan, you often have the following options: leave the money in the current employer-sponsored plan, move it into a new employer-sponsored plan, roll it over to an IRA, or cash out the account value. Leaving money in a plan may provide special benefits including access to lower-cost investment options; educational services; potential for penalty-free withdrawals; protection from creditors and legal judgments; and the ability to postpone required minimum distributions. If your plan account holds appreciated employer stock, there may be negative tax implications of transferring the stock to an IRA. Whether to roll over your plan account should be discussed with your financial advisor and your tax professional.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
