Webinar Transcript (12/4/2025):“The Final Countdown: 2025 Last Minute Wealth Planning Ideas"
Host/Presenter: Jonathan I. Shenkman, President & Chief Investment Officer of ParkBridge Wealth Management (Contact: jonathan@parkbridgewealth.com)
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Jonathan Shenkman: Okay, good morning, and welcome to the Park Bridge Wealth Management Fall Webinar Series. This program is entitled, The Final Countdown, 2025 Last Minute Wealth Planning Ideas.
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Jonathan Shenkman: As always, my name is Jonathan Shankman. I'm the President and Chief Investment Officer of Park Bridge Wealth Management, where I work with individuals and families to manage their investment portfolios and provide financial planning guidance. So this is my fourth year-end wealth planning webinar, so it's become somewhat of a tradition at this point.
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Jonathan Shenkman: For folks who have never attended my year-end webinar before, I aim to cover a bunch of different planning ideas to help you and your clients before December 31st and beyond.
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Jonathan Shenkman: I'll discuss a whole host of timely topics, from investing, estate planning, tax strategies, and more, so prepare to receive a firehose of information and have a pen and paper ready.
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Jonathan Shenkman: Okay, here we go. So, first, let's start with some investment ideas. In particular, some year-end investment do's and don'ts. First, do consider rebalancing your portfolio.
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Jonathan Shenkman: Many parts of the market went up in 2025. However, there may be individual investments within your portfolio that went down, or didn't go up as much as other areas. This may include REITs, small-cap stocks, and investment-grade bonds, all of which have underperformed the S&P 500 and international markets.
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Jonathan Shenkman: Interestingly, international markets actually crounced the performance of the S&P 500 this year, so keep in mind that it always pays to diversify.
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Jonathan Shenkman: Given these market dynamics, many investors' portfolios are probably out of whack, and it may make sense to rebalance your portfolio for a few different reasons. One, ensure that your allocation is brought back to its appropriate risk tolerance. Two, to potentially lock in some losses for tax planning purposes. And three, add the proceeds to your losing positions that may appreciate meaningfully in the future.
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Jonathan Shenkman: The next point is don't chase past performance. Today, and every day, is a good reminder to stay away from the current hot strategy du jour. Every year, there's always some investment that did phenomenally well. Unfortunately, it's impossible to know beforehand which manager strategy or index that will be.
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Jonathan Shenkman: This won't stop aggressive salesmen from capitalizing on a recent success, touting great returns and encouraging investors to invest in yesterday's winners.
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Jonathan Shenkman: In particular, you see this in private credit, which has been a jarling to investors for some time. However, this year, there have been many stories of private credit taking quite the beating. Remember, the market moves in cycles. One year's winners are oftentimes losers in the following years.
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Jonathan Shenkman: The key is to stick with a proper asset allocation and plain vanilla investments that will allow you to achieve your goals. Chasing past performance will not work out over the long term. And here's a quick, investment planning tip, which is to automate your investment process. You shouldn't have to manually move money into your investment accounts multiple times a year. I encourage all my clients to automate their deposits into their various accounts, and like all my advice to my clients, I practice what I preach
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Jonathan Shenkman: do this with my own money as well.
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Jonathan Shenkman: Automation removes emotions from your investment process and works out well over time.
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Jonathan Shenkman: Next idea is regarding required minimum distributions, or RMDs. RMDs apply to folks who are 73 or older, and to beneficiaries who inherit these accounts.
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Jonathan Shenkman: If you are subject to RMDs, and don't take them out before the end of the year, there will be a penalty. If you don't need your RMDs to pay your living expenses, explore other options, like giving them directly to charity. And on that point, a good planning tip.
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Jonathan Shenkman: is to utilize qualified charitable distributions, which allows you to give up to $108,000 per individual, or $216 per married couple in 2025 from your IRA directly to charity without needing to pay tax on these distributions, and they count towards your RMD.
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Jonathan Shenkman: Which brings me to my next idea, which is charitable giving.
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Jonathan Shenkman: When it comes to giving charity, there are a myriad of creative options this year.
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Jonathan Shenkman: First, consider finding Front-loading charitable gifts.
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Jonathan Shenkman: The reason for this is starting in 2026, the new tax law will set a minimum threshold that an individual taxpayer's charitable contributions must exceed in order for that taxpayer to get any tax benefit from claiming them as itemized deductions. That threshold is 0.5% of an individual taxpayer's AGI.
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Jonathan Shenkman: This means that if an individual taxpayer's contribution base is a million dollars and they itemize their deductions, that taxpayer receives no benefit for the first $5,000 contributed to charity.
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Jonathan Shenkman: Therefore, an individual taxpayer who itemizes in 2025 will generally still have their charitable contributions count, beginning with the first dollar donated. For individual taxpayers for whom the 0.5% threshold is a concern, they may want to consider front-loading their contributions in 2025, rather than waiting until 2026.
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Jonathan Shenkman: Building on that point, consider utilizing a donor-advised fund or a DAF.
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Jonathan Shenkman: A DAF is an account where you can deposit assets for donation to charity over time. The donor gets an immediate tax deduction when making the contribution to the DAF, and can still control how the funds are invested and distributed to charity. A DAF can be extremely useful if you hold a security with no cost basis.
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Jonathan Shenkman: A highly appreciated stock.
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Jonathan Shenkman: or a concentrated position. In all these scenarios, the tax liability can be circumvented by moving that position to a DAF. DAFs are also useful when bunching your charitable contributions, which involves donating several years' worth of charitable dollars all at once.
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Jonathan Shenkman: Contributions to charity are only tax deductible to those who itemize the deductions. This year, the standard deduction is $15,750 for single filers, and $31,500 for married couples filing jointly. To help your itemized deductions exceed the standard deduction amount, one can bunch
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Jonathan Shenkman: multiple years' worth of charitable donations. This allows the donor to exceed the standard deduction, take the itemized deduction, and still distribute the funds over the current and subsequent years. And here's a charitable giving planning tip, which is to donate appreciated stocks.
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Jonathan Shenkman: This is especially relevant in 2025, since stocks skyrocket in many areas of the market. It may also apply if you have a concentrated stock position with large unrealized capital gains, or large stock positions that you want to trim to de-risk your portfolio. For these scenarios, consider donating these highly appreciated securities directly to charity.
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Jonathan Shenkman: Which helps avoid paying capital gains tax.
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Jonathan Shenkman: Next idea is Roth IRA conversions. This is the process of transferring retirement funds.
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Jonathan Shenkman: From traditional IRA, SEP, or 401K into a Roth account, since a traditional IRA is tax-deferred while a Roth is tax-exempt, the deferred income taxes due will need to be paid on the converted funds at the time of conversion. There is no early withdrawal penalty for this strategy. The key is to evaluate your personal tax situation.
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Jonathan Shenkman: This strategy may be beneficial if a saver believes that the postponed tax liability in the traditional account would be more onerous
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Jonathan Shenkman: as retirement approaches. For example, if they think tax rates will go up, they move to a higher tax state, or if they'll be earning higher income in the future.
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Jonathan Shenkman: then that all may make sense to do him. If you were laid off this year, Roth conversions may be worth considering, since you may now have lower income than usual. However, be mindful that if paying the tax bill now is too burdensome, then this may not be a good option for you. And here's a planning tip.
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Jonathan Shenkman: to consider is to sit down with your tax advisor, determine how much income can be realized within the current tax bracket before creeping into the next bracket to assess how much in traditional retirement funds to convert to a Roth.
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Jonathan Shenkman: And just a word of caution, Roth IRA conversions and a related strategy, the backdoor Roth contributions, are both popular subjects to discuss around the water cooler. Remember, just because your friends or know-it-all brother-in-law are implementing the strategy does not mean it makes sense for you.
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Jonathan Shenkman: Next is beneficiary updates. Retirement accounts and insurance policies have beneficiary designations that pass outside of one's will. Therefore, even if you did estate planning, it's still important to review your beneficiary designations to ensure that your money is passing according to your wishes.
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Jonathan Shenkman: Also, be aware of and plan for changing family dynamics. Did a family member who was a beneficiary on your account pass away this year? Did you want to alter beneficiaries but your family dynamics have changed? Be sure to reach out to your advisor to update them on your situation and discuss best practices.
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Jonathan Shenkman: The example I always give is regarding an ex-spouse inheriting your assets, which is a devastating misstep and not unheard of. And here's a timely planning tip that's tangentially related. In late 2019, Congress passed the SECURE Act, which eliminated the stretch option on distributions from inherited retirement accounts
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Jonathan Shenkman: Under the new rules, most non-spouse beneficiaries are required to fully distribute inherited account balances by the end of the 10th year following the account owner… when the account owner dies. Conducting annual beneficiary reviews is a great way to identify clients
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Jonathan Shenkman: Whose estate plans have been impacted by this change, and it may prompt discussions with clients and their heirs around efficient wealth transfer strategies.
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Jonathan Shenkman: For example, utilizing charitable Remainder Trust to replicate the benefits of the now-defunct Stretch IRA.
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Jonathan Shenkman: Now let's discuss some estate planning considerations. So the lifetime exemption is set to increase to $15 million per person in 2026, and it's permanently indexed to inflation. That change eases the urgency around making large gifts before the end of 2025, because families no longer face a use-it-or-lose-it deadline.
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Jonathan Shenkman: Instead, this is a good time to review your overall estate plan. Outdated wills and trusts may not reflect today's laws. Consider whether annual exclusion gifts, which are $19,000 per recipient in 2025, may make sense to reduce your taxable estate gradually.
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Jonathan Shenkman: Also, keep in mind that direct payments for tuition or medical expenses remain an underused tool that can move assets out of your estate without affecting your estate tax exemption amount.
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Jonathan Shenkman: It's also important to remember that federal rules aren't the whole story. States like New York impose their own estate taxes, often with significantly lower exemption threshold. As a result, thoughtful and proactive planning remains critical to address both federal and state-level implications effectively.
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Jonathan Shenkman: Another consideration is balancing capital gains and estate taxes. When deciding whether to gift assets during life or hold them until death, it's essential to consider the trade-off between income and estate taxes. Under the new law, the step up in cost basis remains intact.
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Jonathan Shenkman: This means that any unrealized capital gains on assets held until death are eliminated when passed to heirs. The cost basis of inherited assets resets the market value at the time of death, so if heirs sell immediately, no capital gains tax is due.
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Jonathan Shenkman: By contrast, giving assets during life transfers the donor's original, cost basis to the recipient.
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Jonathan Shenkman: the asset has appreciated significantly, the recipient may face substantial capital gains tax upon sale. This means timing and asset selection is critical when planning lifetime gifts versus leaving inheritance.
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Jonathan Shenkman: In this practice, this means families should weigh their estate size and their projected appreciation of their assets against the new permit exemption amount. For some.
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Jonathan Shenkman: whose assets far exceed the exemption amount, gifting can help reduce future estate taxes. For others, retaining assets until death may be more tax-efficient for heirs due to the step-up in cost basis benefit if the assets are highly appreciated.
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Jonathan Shenkman: Now, here's a planning tip for property owners in New York City on mitigating their estate taxes. So the win in the New York City Mayor race by Zora Mamdani, the 34-year-old socialist and anti-Israel activist, has caused investors to be concerned about the values of New York City real estate over the next four years.
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Jonathan Shenkman: While many may be confident in the city's long-term real estate growth, the Mamdani victory may temporarily drive prices down, given his socialist talking points.
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Jonathan Shenkman: While Comrade Mamdani's ability to implement most of these plans requires legislative approval, the effort to work towards these economically unfavorable plans may be enough to drive real estate prices down.
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Jonathan Shenkman: The silver lining for New York City property owners is you may want to consider moving these assets out of your estate at lower valuations. New York State's estate tax exemption is $7.16 million in 2025, and it's expected to adjust slightly higher in 2026.
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Jonathan Shenkman: Remember, there's no portability between spouses, which means couples must plan proactively to shield up to $14.32 million combined.
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Jonathan Shenkman: Also, keep in mind the CLIFT threshold, which is when an estate exceeds the exemption amount by more than 5%, then the entire estate becomes taxable, not just the excess. This can result in a steep tax liability.
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Jonathan Shenkman: I advise folks with real estate holdings in New York City to now meet with their estate planning attorney to discuss how they can now strategically utilize the lower valuations to save them and their heirs from paying estate taxes in the future.
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Jonathan Shenkman: This is also an opportune time to evaluate your estate planning strategy in light of the interest rate environment, which may impact the effectiveness of certain wealth transfer techniques. I'm just going to discuss several strategies that may have impacted planning.
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Jonathan Shenkman: First, there's the intra-family loans. When structured properly, interfamily loans offer a way to transfer wealth by allowing assets to appreciate above the IRS-mandated applicable federal rates, or AFRs. Because commercial lending rates are generally higher than AFRs, these loans remain a sensible option in many situations. The AFRs set the minimum interest rate required to avoid classification as a taxable gift.
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Jonathan Shenkman: A loan with little or no interest can still be deemed a gift by the IRS. Remember, AFRs can be… can vary based on loan terms.
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Jonathan Shenkman: With 30-year fixed mortgage rates currently around 6.2% or something in that area, interfamily loans using lower AFRs remain an attractive strategy. While higher AFRs increase the required interest on these transactions, reducing the spread between the loan rate and the growth rate, these arrangements can still deliver meaningful estate tax benefits, particularly for families with reliable income-producing assets.
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Jonathan Shenkman: When paired with the newly increased lifetime exemption thresholds under OBBA, these loans remain a tax-efficient way to shift wealth across generations.
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Jonathan Shenkman: Another consideration is grantor-retained annuity Trust, or grants. From a wealth transfer perspective, grants become less efficient in a high interest rate environment. Their success depends on the trust assets outperforming the Section 75-20 rate, which serves as this…
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Jonathan Shenkman: Which serves as the minimum threshold for gift tax-free appreciation. As rates fall, however, this hurdle becomes easier to clear, increasing the tax-free value that can be transferred.
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Jonathan Shenkman: Speaking of grants, here's a timely planning tip. In this changing interest rate environment, consider refinancing grats when the second 75-20 rate decreases, which has done over the past few months.
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Jonathan Shenkman: Refinancing an existing grant can improve the efficiency of wealth transfer by lowering the hurdle rate the trust assets must exceed to produce a tax-free gift. By rolling the remaining grant assets into a new grant structure under the lower rates, the grantor structure may capture additional appreciation for beneficiaries with reduced gift tax exposure.
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Jonathan Shenkman: Now for some year-end trust administrative items. Investors may wish to review the administration of any trust of which they're a grantor, beneficiary, or trustee in a few ways. First, sending crummy notices. In some cases, an individual may design an irrevocable trust, like an irrevocable life insurance trust.
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Jonathan Shenkman: So that one or more of the beneficiaries has the power to withdraw some or all of each contribution made to the trust. To the extent that a beneficiary can withdraw a contribution to this type of trust, the contribution is a gift.
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Jonathan Shenkman: The contribution is a gift to the beneficiary and qualifies for gift tax annual exclusion. When an individual makes a contribution to the trust, the trust agreement may require the trustee to provide notices to the beneficiaries who can withdraw some or all the contribution.
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Jonathan Shenkman: Even if the trust agreement doesn't require the trustee to send those notices, it may be advantageous to do so to ensure the contribution qualifies for the gift tax annual exclusion.
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Jonathan Shenkman: Next is making year-end contributions from non-grantor trusts before December 31st. A grantor or beneficiary of a non-grantor trust might ask the trustee to consider distributing the trust's income to beneficiaries who are taxed at lower rates than the trust.
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Jonathan Shenkman: This may be more tax-efficient because trusts are subject to the compressed income tax brackets and a lower threshold for the 3.8% net investment income tax.
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Jonathan Shenkman: On that point, here's a planning tip. Under the 65-day rule, the trustee may make distributions within the first 65 days of 2026 for tax purposes, treated as being made on December 31st, 2025.
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Jonathan Shenkman: This gives the trustees some extra time to evaluate whether to make a distribution. Of course, the trustee should consider the tax status, goals, objectives of the trust and beneficiaries before making any tax-motivated distributions to the beneficiaries.
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Jonathan Shenkman: Next, let's shift gears and go back to investing.
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Jonathan Shenkman: While this is not necessarily year-end related, it is very relevant based on where we are in the interest rate cycle, and should have a profound impact on portfolios in the coming years. So the benchmark rate was cut twice this year, and is now at a target rate of 3.75-4%.
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Jonathan Shenkman: During every falling interest rate environment, I've noticed investors making the same mistakes in an effort
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Jonathan Shenkman: to get higher yields, but end up increasing risk within their portfolios. If advisors anticipate these common missteps, they will be well equipped to help guide their clients through this part of the cycle and keep them on track financially. Let's go through some of these.
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Jonathan Shenkman: First is reaching for yield. Over the past few years, investors have enjoyed putting their cash and money market funds and collecting attractive yields with virtually no risk.
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Jonathan Shenkman: However, as rates come down, these risk-free rates will also fall. While searching for higher-yielding investments, investors may subject this money to volatility and possibility of losing principle.
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Jonathan Shenkman: Next is the mistake of pursuing lower credit quality. Investors may be enticed by lower credit… lower quality credit to maintain a certain yield within their fixed income allocation.
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Jonathan Shenkman: Unfortunately, that means investing in companies with shakier balance sheets. This may be fine for a small portion of one's portfolio. However, substituting most of your fixed income to obtain a higher yields is ill-advised.
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Jonathan Shenkman: If you want higher yields in a low-interest environment, you need to be willing to take more risk with your capital.
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Jonathan Shenkman: It's important to keep in mind that the ultimate role of high-quality bonds in one's portfolio is to serve as a ballast against more volatile equity positions. Once you invest in lower quality companies, those diversification benefits and the margin in safety are gone.
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Jonathan Shenkman: And the third mistake is extending duration.
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Jonathan Shenkman: Another way for investors to maintain a targeted yield within their portfolios is by extending the duration on their fixed income holdings. In other words, instead of going out 1 or 2 years on the yield curve, they instead
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Jonathan Shenkman: go out one to two decades or longer. The challenge is that duration is a measure of bonds' price sensitivity to interest rate changes expressed in years. Therefore, a bond with a higher duration is more sensitive to interest rate fluctuations. Its price will change more significantly for a given change in interest rates than the price of a lower duration bond.
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Jonathan Shenkman: For example, a bond with a 10-year duration is expected to lose approximately 10% of its value if interest rates rise by 1%, whereas a short-duration bond would be expected to lose only about 1% of its value.
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Jonathan Shenkman: Granted, we are in a falling rate environment, but any unexpected change to interest rate policy can leave bond investments just as volatile as equities without the upside that equities provide.
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Jonathan Shenkman: And here's a planning tip to consider, which is a reminder to stay focused on your goals, or your client's goals. Neither the Fed nor movements in interest rates should be the key driver to your client's ability to reach their objectives. The ultimate determinant of financial success is having a plan and sticking with it through all market cycles, which is far more important than any tactical moves related to interest rates.
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Jonathan Shenkman: And this brings us to a related point, which is where to best allocate your cash now that rates are falling. Ultimately, when you need the money should determine where to put it, so it's imperative to understand your time horizon on your various pools of asset. For example, cash equivalents. As I mentioned, an emergency fund of 3-6 months worth of expense money should stay in cash.
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Jonathan Shenkman: Suitable cash investments for this bucket are money market funds, maybe CDs, and perhaps T-bills. Even as rates continue to drop, you don't want to risk short-term funds in other investments.
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Jonathan Shenkman: The key is having liquidity when you need it.
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Jonathan Shenkman: Next are bonds, which typically offer lower returns than stocks, but higher returns than cash equivalents. Bonds are useful in achieving intermediate goals since they help diversify a portfolio and reduce intermediate risk. If you have a goal that is less than 10 years down the road, bonds should be a component of your investment strategy. And finally, there are stocks.
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Jonathan Shenkman: which are the ultimate investment for long-term portfolio growth. If you want your portfolio to grow over the long term and outpace inflation, stocks should be a significant portion of your holdings. Any investor with a 10-year-plus time horizon
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Jonathan Shenkman: is doing themselves a major disservice if they don't own enough stocks. And here's a planning tip, which is asking yourself, what am I looking to accomplish with my money? Your answer will determine when you need your money, and will then lead you to the correct decision on where you should allocate it.
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Jonathan Shenkman: Next topic is 529 contributions. A 529 is a tax-advantaged college savings account that may provide an opportunity for intermediate tax savings if you live in one of the 30 states or more, offering full or partial deduction for your contributions to the home state 529 plan. Most states require you to invest in the in-state plan to receive a deduction for your contributions.
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Jonathan Shenkman: Though there are several states that are considered tax parity states, meaning you can use any state's 529 plan to receive the deduction.
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Jonathan Shenkman: One strategy to consider before your end is super funding 529 accounts.
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Jonathan Shenkman: Here you can spread a tax-free gift to a 529 account over 5 years for gift tax purposes. So a married couple, not making any other gifts to the beneficiary during the 5-year period, can contribute up to $190,000 to a 529 plan for each child.
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Jonathan Shenkman: And, with the IRS 709 form, 5-year averaging Election, you do not run into gift tax problems. The strategy allows you to avoid using your lifetime gift tax exemption, it reduces your taxable estate, and the earnings growth is tax-free if it's used for qualified higher expense… education expenses.
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Jonathan Shenkman: Now for a planning tip, which is 529 assets are not currently factored in as assets for the purpose of determining federal financial aid under the FAFSA process if held by grandparents opposed to parents where they are considered.
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Jonathan Shenkman: This may be a wonderful way for grandparents to save their grandkids higher education without jeopardizing their ability to qualify for financial aid.
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Jonathan Shenkman: The next idea is tax loss harvesting, which is the process of selling securities at a loss to offset a capital gains tax liability before your end. When reviewing portfolios with your clients, advisors should determine if there are opportunities to strategically generate losses to offset other gains. For example.
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Jonathan Shenkman: Using a tax swap strategy for mutual fund holdings allows you to realize a tax loss while retaining essential equivalent market exposure. The key is that the funds are not substantially identical. The way around that is by about using different fund families to track different indices, and may pay… may have a slightly different strategy, but that still have similar results. A common example is swapping an S&P 500 fund at one company and buying a total US market
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Jonathan Shenkman: market funds at another fund family. No, the S&P is up this year, but that's the concept that you would consider for different asset classes.
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Jonathan Shenkman: And here's a planning tip. One creative approach to tax loss harvesting is to donate cash proceeds from the sale of stocks that are at a loss.
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Jonathan Shenkman: In this strategy, investors benefit from recognizing a loss by selling a stock that went down in value. The loss can be used to offset any capital gains through the year, or it can be used to offset up to $3,000 of your ordinary income. That is in addition to the charitable deduction you may receive for the cash donation from the proceeds of the sale.
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Jonathan Shenkman: Okay, next ideas regarding employer retirement plans. Here are a few items to keep in mind.
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Jonathan Shenkman: First, assess contributions made this year. You should review how much money you contributed to your employer retirement plan this year. If you're financially able to, max out your 401K or 403P if you have not done so already. In 2025, those limits are $23,500 before any company match.
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Jonathan Shenkman: Or $31,000 if you're 50 or an older. And, if you're 60 to 63, you could contribute $11,250 instead of just the additional $7,500, just to make things adequately complicated.
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Jonathan Shenkman: Also, be mindful of next year's contribution limits for 2026. The contribution limit for someone under 50 is $24,500. For folks over 50, they can contribute an additional $8,000, up to $32,500. And for individuals that are ages 60 to 63, the cash-up contribution limit is $11,250 instead of the $8,000, which brings their max contribution to $35,750.
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Jonathan Shenkman: Don't forget to make the required tweaks within your plan to ensure that you are making the maximum contribution for the coming year.
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Jonathan Shenkman: Next is the classic deliberation between a Roth versus a traditional. The rule of thumb is if you think that you may have a high-income year, then a traditional IRA makes more sense. If you anticipate a low-income year, then a Roth IRA makes sense. Regardless, the key is that you're saving money, but if you want to get in the weeds about it, you could decide whether a Roth or traditional makes sense, given your current situation. Also, review your investment lineup and portfolio. Determine with your advisor if it makes sense to make any changes.
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Jonathan Shenkman: And this is especially applicable if your firm switched 401K providers recently, if you rolled over an old 401 into your IRA, or if you're approaching retirement. In any of these scenarios, tweaking your investments may make sense.
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Jonathan Shenkman: And here's a planning tip. Consider consolidating old accounts. If you have old retirement accounts held at previous employers, be sure to consolidate them into an IRA to keep your assets organized. It rarely makes sense to have retirement accounts scattered at various institutions, especially old employers.
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Jonathan Shenkman: If you need help consolidating old accounts, feel free to reach out directly to me, and I can help you.
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Jonathan Shenkman: Next, consider maxing out your health savings account, or HSA, which allows you to save and pay for qualified medical expenses with tax-free dollars. In order to contribute to an HSA, traditionally, you had to be enrolled in an HSA-eligible health plan. You could only contribute a certain amount to your HSA each year, but all contributions roll over year to year. In 2025, you can contribute up to $4,300 for yourself, and $8,550 for family.
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Jonathan Shenkman: And for folks who are 55 or older can contribute an additional $1,000 per eligible spouse, up to the total amount per married couple of $10,550.
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Jonathan Shenkman: It's important to note that the eligibility for health savings accounts will expand in 2026. The new tax bill expands eligibility to people who use independent insurance through the Affordable Care Act, or ACA, and opt for either the bronze or catastrophic level of coverage. The bill also opens HSAs to people with subscription-style primary care services, in which they pay an annual fee rather than a per
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Jonathan Shenkman: visit fee to see their doctor. The open enrollment period for insurance through ASA is currently underway and ends January 15th. A planning tip with HSAs is to let the funds accumulate and grow by investing in them aggressively while you're younger, when your medical bills may be lower.
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Jonathan Shenkman: Once you are in retirement and your medical bills go up, you will have a substantial HSA account that can be used to pay your higher medical expenses.
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Jonathan Shenkman: Next, if your clients have employer-sponsored benefits, they may have access to a flexible spending account, or FSA. FSAs allow you to contribute pre-taxed money up to a certain amount to an account that can be used to pay for eligible out-of-pocket healthcare expenses, or eligible dependent care services, such as child care. Here's a planning tip. FSA funds are use-it-or-lose-it, meaning you generally can't roll the full amount into the next calendar year.
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Jonathan Shenkman: To avoid losing any unspent funds, make a plan to use the money before December 31st.
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Jonathan Shenkman: Now let's turn to budget… budgeting expense goals for the coming year.
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Jonathan Shenkman: It's always essential for investors to assess their expenses and plan ahead for the future. One thing to consider is cash flow management for retirees. This is especially important since retirees must evaluate how much cash they will need in the year ahead to live on, and should work with their advisor to ensure they're able to meet those needs. Next consideration is mitigating sequence of returns risk. Retirees should target a higher cash cushion
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Jonathan Shenkman: and what's typically recommended for non-retirees in order to sufficiently mitigate the risk of experiencing lower or negative returns early in retirement when withdrawals are being made from an investment portfolio. The order or the sequence of investment returns can significantly impact your portfolio's overall value, and consequently, your ability to maintain your lifestyle later in retirement.
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Jonathan Shenkman: Here's a budgeting planning tip. For clients that are in the accumulation stage of retirement planning and drawing down their portfolio, the amount of money they need may have increased while many financial advisors use 4% as the annual safe withdrawal rate. It's worth reassessing these numbers every year based on personal circumstances, market performance, and the economic environment to see if anything has changed.
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Jonathan Shenkman: We're almost finished. Now let's discuss income tax planning. In general, year-end income tax planning involves trying to accelerate deductions and defer income while being sure to take advantage of lower marginal tax rates and avoid income bunching in future years.
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Jonathan Shenkman: A good starting point is using your income and deduction information from your last return and adjusting for anything you know about the current year, such as changes in income, tax rates, potential deductions, and so on.
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Jonathan Shenkman: Then calculate what your taxes will be based on those conditions. The more you know about your current year's finances, the more accurate the projection will be. That's why it's important to wait until later in the year, like we are now, to run the projection. And here's a planning tip to consider. Effective for 2025,
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Jonathan Shenkman: The maximum deduction you can claim on your federal tax return for state and local taxes, or SALT, has been bumped to $40,000 from $10,000 for both single and joint filers who earn $500,000 or less. For those with income above a half a million dollars, the deduction will be reduced
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Jonathan Shenkman: By 30% of the amount, income in excess of a half a million dollars, and the cap falls back to $10,000 once income hit $600,000.
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Jonathan Shenkman: If your income is in or above the phase-out range, consider ways you can defer income into 2026 to qualify for a higher SOL cap this year. Folks with the most flexibility with this type of planning are people who have control over the timing of their income, like a business owner.
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Jonathan Shenkman: Next is the always exciting Alternative Minimum Income Tax, or AMT, which impacts more taxpayers in 2025 due to changes under the OBBA. Those earning $400,000 to $600,000 or exercising incentive stock options are at most risk. Under both systems, AMT requires calculating taxes and paying the higher amount.
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Jonathan Shenkman: For 2025, the exemption is $137,000 for joint filers and $88,100 for singles.
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Jonathan Shenkman: It's being phased… it begins phasing out once income reaches $1,252,700 for couples, and it's $626,250 for singles, numbers that are easy to remember. Next year, exemptions phase out faster during a million dollars for a couple, and a half a million dollars for singles, with a 50% annual reduction, which is up from 25% in 2025.
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Jonathan Shenkman: The salt cap increases, also and heightens exposure.
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Jonathan Shenkman: And here's a planning tip to consider to minimize AMT. Consider accelerating income or adjusting deductions, in particular for folks who hold stock options. They should exercise cautiously splitting activity across tax years.
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Jonathan Shenkman: Another year-end planning tip is for families who created a private foundation. Before year-end, foundations must make qualifying distributions of at least 5% of the foundation's assets each year. In general, distributions include grants to public charities and administration expenses, but do not include investment management fees. The failure to make required annual 5% distributions results in excise taxes on the shortfall.
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Jonathan Shenkman: And here's a practical planning tip, which is that a private foundation's investment should be structured to balance this 5% distribution requirement and various other objectives. Consider utilizing a bond tent to factor in these distributions every year, and pairing it with other investments for the necessary growth to achieve its goals. And, again, if you need help structuring this, feel free to reach out.
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Jonathan Shenkman: Now, one final year-end idea, which is to buy my book. This is my first book, and I would love your support as well as your feedback. The book is called These for Diversification, ABCs of Personal Finance, and it's geared towards introducing toddlers to personal finance, one letter at a time.
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Jonathan Shenkman: Each page pairs a financial concept with a vibrant illustration. This would be a wonderful holiday gift for family, friends, and clients. Buy one for yourself, then a copy, or 10, for everyone else in your family with young children. You can now buy it on Amazon, or by going to jonathanOnMoney.com.
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Jonathan Shenkman: And that concludes today's program. Should you have any follow-up questions, you can reach out to me at jonathan at parkbridgewealth.com. Email's generally the best way to get ahold of me. Three more quick items before I let you go today. First, my full webinar series continues on Thursday, December 18th, featuring K.E. Elijakovan.
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Jonathan Shenkman: for the law firm Grant Herman, Schwartz, and Klinger, based in New York City, and Eli's gonna be speaking on the topic of asset protection and personal guarantees. I'll be sure to send out the invitation to this program in the coming days.
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Jonathan Shenkman: Second, you can follow all my work on X and Instagram at Jonathan on Money, and by connecting with me on LinkedIn, you can also listen to my weekly podcast called Jonathan on Money, and you can watch my practical planning videos, which I post several times a week, by following me on YouTube at Jonathan on Money as well. And third, please take 30 seconds to fill out my survey at the end of this program. It helps me improve my webinars and provide timely and interesting content to attendees.
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Jonathan Shenkman: I thank you in advance for that. And with that, this concludes today's session. Please stay safe and healthy, and have a wonderful day, everybody.