Beyond Standard Moves: Your 2025 Strategy Guide

At AlphaCore, we believe true alpha can emerge from spotting opportunities others might miss. While most investors focus on routine year-end moves, we’re seeing unique possibilities to enhance your comprehensive wealth picture.

Today’s Opportunities

While many follow standard approaches, several strategic opportunities deserve attention, particularly given current market conditions and potential tax changes ahead.

Strategic Distribution Planning

For those over 70½, an often-overlooked opportunity exists through Qualified Charitable Distributions (QCDs)1.

This strategy allows you to:

  • Direct up to $105,000 from your traditional IRA to charity
  • Reduce your taxable income while supporting causes you care about
  • Satisfy required distributions (if you’re over 73) without increasing your adjusted gross income
  • Consider a one-time opportunity to direct up to $53,000 to a charitable trust or annuity
  • Maintain control through minimum annual distributions of at least 5%

What makes this strategy powerful? It works even if you don’t itemize deductions, potentially reducing your tax burden while fulfilling your charitable goals.

Smart Charitable Giving

Strategic giving current market conditions have created interesting planning opportunities for charitable giving. According to IRS Publication 526, charitable contribution deduction limits vary based on several factors:2

For 50% limit organizations (as defined by the IRS):

  • Cash contributions may be deducted up to 60% of your adjusted gross income
  • Capital gain property contributions may be deducted up to 30% of your adjusted gross income

For 30% limit organizations (as defined by the IRS):

  • Cash contributions may be deducted up to 30% of your adjusted gross income
  • Capital gain property contributions may be deducted up to 20% of your adjusted gross income

The IRS allows you to carry over any excess contributions you cannot deduct in the current year because they exceed your adjusted-gross-income limits to the next 5 years until used up.

Strategic Approaches:

  • Consider “bunching” multiple years of contributions
  • Evaluate timing of contributions
  • Review documentation requirements

Note: Specific limitations, definitions, and criteria apply. Please consult with your tax advisor about how these rules may apply to your specific situation.

 

Looking Ahead:

Strategic Positioning

With potential tax law changes coming in 2026, thoughtful positioning becomes crucial.

Here’s what to consider:

Roth Conversion Strategies

  • Evaluate tax brackets now versus future expectations
  • Consider converting traditional IRA assets to Roth
  • Assess impact on adjusted gross income
  • Factor in future required minimum distribution (RMD) requirements
  • Plan for legacy goals

Estate Planning Opportunities

  • Current lifetime gift tax exemption is $13.61 million per individual3
  • Evaluate multi-generational planning options
  • Assess trust strategies for tax efficiency
  • Review beneficiary designations

 

Putting It All Together:

The Total Alpha Approach

At AlphaCore, we believe exceptional outcomes can emerge when strategies work in harmony. Consider how these elements might enhance your comprehensive wealth picture:

Distribution Strategy Integration

  • Coordinate RMDs with charitable goals
  • Align giving with tax efficiency
  • Time distributions for optimal impact
  • Consider family gifting strategies

Tax Efficiency Enhancement

  • Evaluate current versus future tax scenarios
  • Consider asset location strategies
  • Review investment tax efficiency
  • Assess alternative investment impacts

Multi-year Planning

  • Project future income scenarios
  • Plan for known life events
  • Consider business succession impacts
  • Evaluate retirement distribution strategies

The Power of Timing

While these strategies are valuable individually, their real power comes from thoughtful coordination. For example:

  • Combining QCD strategies with broader charitable goals
  • Integrating distribution planning with tax positioning
  • Aligning estate planning with charitable intentions
  • Coordinating business and personal tax strategies

Documentation and Implementation

To maximize these opportunities:

  • Maintain clear records of all charitable contributions
  • Ensure proper QCD documentation from your IRA custodian
  • Track cumulative giving for tax purposes
  • Keep detailed records for multi-year strategies

Your next step year-end planning requires both expertise and precise timing. Consider reviewing your strategy now to evaluate which approaches align with your wealth management goals.

Schedule Your Strategy Review

 Sources

  1. Source: Charles Schwab. Data as of October 2024.
    1. https://www.schwab.com/resource/QCD
  2. Source: IRS Publication 526 (2023), pages 13-16. Data as of February 2024.
    1. https://www.irs.gov/publications/p526
  3. Source: Charles Schwab. Data as of September 2024.
    1. https://www.schwab.com/resource/year-end-tax-planning-checklist

Disclosure

This material is being provided with information as of December 18, 2024 for client and prospective client use, and for informational purposes only. This material represents the current views and opinions of AlphaCore Capital, and there is no guarantee that any opinions will prove to be accurate, or any forecasts made will come to pass. No obligation is undertaken to update any information, data or material contained herein.  This material is not intended to be relied upon as a forecast or investment advice, and do not constitute a recommendation, offer, or solicitation for any specific security or any specific investment strategy, as AlphaCore provides investment advice only within the context of our written advisory agreement with each AlphaCore client. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

Any specific security or strategy is subject to a unique due diligence process, and not all diligence is executed in the same manner. All investments are subject to a degree of risk, and alternative investments and strategies are subject to a set of unique risks. No level of due diligence mitigates all risk, and does not eliminate market risk, failure, default, or fraud. There is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses. Past performance is not indicative of future results.

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