The early part of the year is a window for several recommended tax moves, from double-checking that financial institutions have clients’ correct contact information to budgeting for tax-advantaged accounts.

“The earlier that you consider your tax situation, the better the outcome,” said Alan Weissberger, director and portfolio manager at Hirtle, Callaghan & Co. in Conshohocken, Pa.

“It still happens where advisors aren’t aware of marriages, divorces and deaths,” said John Karls, Dallas-based tax partner at Armanino. “The beginning of the year is the perfect time for financial advisors to identify and correct oversights.”

Yet, he added, “the joke in the high-net-worth tax world is that no clients want to do year-beginning planning. There are a few no-brainer items to check off the list as the ball drops. Clients should fund their retirement accounts early and start the clock on the tax-deferred earnings.”

Alan B. Gubernick, an advisor at Financial Services at EisnerAmper in Philadelphia, reminds clients about the new increases in retirement savings limits: $22,500 for 401(k)s, for example, with $7,500 more for those 50 and older. “Many clients are setting these [and other plans] up early in the year to be paid into the plans throughout the year,” he said.

Self-employed individuals might have to fund a Simplified Employee Pension (SEP) IRA, with a maximum contribution for this now up to $66,000. “If your clients have a decent expectation of their self-employment earnings, you can assist them with the calculation of their contribution,” Karls said. “If there’s some uncertainty to where their self-employment earnings will end up, it’s still worthwhile to at least contribute at least half of the anticipated contribution amount now.” 

“Many high-net-worth clients don’t qualify for a deductible traditional IRA contribution,” Karls added. “One way to make this more valuable to your client is to suggest making the contribution, then rolling it over to a Roth IRA shortly afterward. While they still won’t get a current-year deduction, they’ve funded a tax-free retirement account.”

The SECURE 2.0 Act passed last year lengthens the start date for required minimum distributions, Weissberger said. Those reaching age 72 in 2023 or later don’t have to start taking RMDs until age 73. 

“In most cases, RMDs in 2023 are quite a bit lower than 2022, so it’s determining how much more income [clients] may need this year to cover their cost of living,” said Jonathan Thomas, private wealth advisor at LVW Advisors in Rochester, N.Y. “We often see some clients taking their RMD monthly, moving it into their checking account and not spending it. Rather than leave it sitting in checking earning 0%, we can talk about reinvesting, doing quarterly charitable distributions or at the very least earning more through a money market fund.”

Look out for the debt-ceiling debate and its possible negative effects on the markets, Gubernick added.

“Last year we began opening ‘charitable IRAs’ specifically for qualified charitable distributions,” Thomas said. “The client determines their charitable gift goal and we’ll fund this IRA with cash early in the year. The client will write checks directly to charities using a checkbook we provide. This gives them flexibility and discretion in the timing and amount they can gift throughout the year.”

Other conversations Weissberger is having with clients cover, for the ultra-wealthy, using or topping off the lifetime estate and gift-tax exemption that may revert to pre-2017 amounts in three years. “We encourage clients to make their annual exclusion gifts as early in the year as possible,” he said. “Making annual exclusion gifts early in the year avoids a client forgetting about it later in the year or, in the unfortunate event, passing on before completing these gifts.

“We recommend giving cash or assets with a high tax basis so your beneficiaries aren’t burdened with additional taxes,” he said, adding that clients can also pay directly for another’s educational and medical expenses without those payments counting against the annual exclusion gift amount or lifetime exemption.

“Too often, [gifts] are made at year-end, so those funds sit with your clients earning taxable income,” Karls said. “Get those funds out in January and let them grow outside your estate.”