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The December 31st Retirement Deadline: 7 Decisions To Consider · The Jon Sanchez Show

• Jon G. Sanchez: Good Monday afternoon to you. Welcome to the John Sanchez Show on News Talk 780 KH. Pleasure to be with you. Hope you had a great start to the week, a great weekend. And hey, well, I got four more to go. How do you like that optimism? Well, we had some optimism on the street today. Gonna tell of course, what happened today's stock market activity. It was a good day today across the board. Nothing huge, but hey, a lot better than it was on Friday. what a tough day that was. That was not a fun one to to linger in your mind and in your pocket book going into the weekend, I tell you. But again, like I keep saying. One day they love AI, one day they hate it. Today they loved it. And you know what was interesting about today that I'll get to in more detail? This was the day had I had to bet this morning what direction the market was going to go, I would have been completely wrong, just to be honest with you. And the reason being is because we we had a lot of negative things happen this morning in the AI sector. And for some reason the market brushed it aside. So I'll get to that in just a moment because, like I said, actually did pretty well today. All right, we had no economic reports on the calendar, so didn't have that to worry about. Now let's get to today's topic. here we are, what are we, October 26th. Before we know it, it's gonna be Christmas. And before we know it, it's gonna be New Year's Eve, and then the calendar is going to change, right? We know once we hit this time of year, it's as downhill as far as how fast the time goes. But when the clock strikes midnight on December the 31st, several important retirement planning opportunities. will disappear from your life forever. Forever. You can't take back a Roth conversion. You can't retroactively make a charitable IRA donation or distribution, excuse me. You can do a donation too. Or you can't sell an investment last year. So today, even though we're a little bit ahead of things, a little bit ahead of things, I'm going to give you seven decisions that I've created that every one of you that are a retiree or future retiree should make before the calendar year. And possibly you're going to see some, I hope, some significant help to your tax bill by following this advice. And again, I apologize that's a little bit early, but I want to get a jump start on it because, you know, again, if your life is like mine, it seems like once you once you get to especially Thanksgiving, I mean it really is downhill. And what I have found with clients over the years, we get to, you know, maybe the first Maybe if we're pushing it the second week of November and they stop f thinking about money, right? It's all about family and travel and so on and so forth. And so I have a very difficult time getting them to do things like like we're gonna talk about. We do a lot of it for them, but I have a hard difficult time getting them to be thinking about you know, tax planning and stuff like that. So that's why I did it this year. I said, you know what, we're gonna get an early start on this. And I'll be doing, of course, many, many more shows for you. As we get closer to the end of the year as far as tax strategies and so on and so forth. But again, you you I've I've titled today's show, December 31st Retirement Deadline. You know, it is, it's gonna be here before we know it. So let's get a fresh start on it. Let's start thinking about it and get it done so that when the holidays do roll around, it's already done. You don't need to be thinking about money and so on and so forth. You get to spend time with your family and your friends. And that's what, of course, the holiday seasons are all about. So I'll get to that momentarily. Now let me go back to what I was saying just a moment ago. Very much surprised that the market eked out again that it did today. It could have been, of course, a lot attributed to the again the the absolute drubbing that we took on the specifically on the Dow Jones Industrial Average on Friday, right? That was like I said, a tough one to go into the weekend on. You know, we faced selling right across the board, had a on Friday, had a 653-point loss on the Dow. NASDAQ was down 54, SP lost 40. So, like I said, we had a lot of negativity going into the weekend. And then when the news started to come out, let yesterday on Sunday as well as this morning, I thought, well, here we go, more of the same. And my topic on Friday, which was again teaching about the AI spending and the concerns that I have and so on and so forth, absolutely came true. Absolutely came true. Let me tell you what happened. And again, very much of a surprise that the market did not react negatively to this. So it started yesterday, on Sunday, when we got a an ex post from Elon Musk. And he he he said It it was really a a bizarre comment. Really bizarre comment. And what he said was he he kind of got into an argument with a with a I I don't know, I've never heard of this gentleman. I can't recall his name. I don't have the article in front of me. I think the guy was a probably hedge fund manager. but they kind of got into an argument about valuations and this hedge funds manager, you know, just talking about his concerns just like mine in regards to how much debt these companies are getting into, there are they going to see a return, so on so forth. But Elon he he chimes in on X and he said, in his opinion, there's 200 plus, 200 plus companies like a like a core weave the companies that surprise what they're called neo cloud companies, they basically sub provide support products services for the data centers. Okay. So they're I won't say they're, they're, behind the scenes. They're, but they're, they, they're what make data centers run. And so Elon Musk said, in his opinion, there's 200 plus of these companies that are going to die a guppy death. And I thought to myself, okay, a guppy death. So that means what, the guppy's floating on the surface of the water and it's gasping for air and then it finally dies. I guess that's what he meant by that. And so, early this morning we started to see some of those names, like the core weaves, et cetera, fall down, go down. They were down in the pre-market based upon that comment, or who knows what, because of course they had a rough week. But you know, looking at core weave, it actually finished up about 95 cents, one and three quarters percent. So a lot of them did end up coming back. But that's how things started. And we know how powerful Elon Musk is. And when he makes those kind of comments, that in his opinion, 200 plus of these companies are not going to be around in the next few years. I thought, okay, here we go. You're gonna see a big sell-off in this area. Okay, so that was factor number one. Then we get into factor number two. Meta came out, I don't know what it was, seven, eight o'clock, somewhere around there, and said they're gonna raise $95 billion in equity for AI expansion. $95 billion. And they're essentially gonna do it through secondary stock offerings. Well, whenever a company does a secondary stock offering, of course, that's never a good thing, right? Because that dilutes the existing shareholders. Meta finished down about $12.6, 1.88%. So yeah, was it down? Yeah, but nothing like it could have been on a day where we woke up and we didn't like AI, right? Stock finished at 6 30 56. Then the third, leg to the stool today, back to Elon Musk, SpaceX. He said this morning, or the company said, that they're going to obtain $40 billion in debt financing for GPU purchases. That's the chips. $40 billion. So now you have two major players in the AI space saying we've got to take on more debt, right? This is the opposite of what everybody wanted to hear. But like I said, Street did not even pay attention to it other than you know a little bit of a hiccup in in in meta. Nvidia was strong. You think it would have been impacted by it, but it went up because they're like, okay, SpaceX, and SpaceX said that you know this forty billion dollars they're gonna do in debt financing. So debt financing, of course, is usually Some form of of bonds, corporate bonds, etc. but he had said it's gonna be used again for GPU purchases. Well, those are Nvidia chips. So Nvidia shot up on the news: $5.06, a 2.4% rise to $216.02. Tesla had a good day today, has stayed on the Elon Musk theme. they got an an upgrade to an overweight from an equal weight at Barkley's this morning. Stock went up $19.40 to $391.62. So that was, you know, kind it in the tech space today. Like I said, I think we dodged a bullet, no pun intended, but did pretty well overall. let's see, Doordash was a big mover today, down six point one percent, ten dollar and ninety-four cent loss to one sixty-eight. Instacart up four dollars and forty-four cents, seven point eight seven percent gain to sixty eighty-eight. Apple, you know, again, it it seems to be recently we have a down day in the market, Apple goes up, and vice versa. And that's exactly what happened today. Upday in the market, Apple down. $3.82, 1.1% loss to $3.43.90. No specific news behind it. let's see, want to mention Google, about a $3.9 loss to $314.19. Verizon was a little bit of a pressure down a dollar fifty-five, three point four seven percent to forty-three eleven. Remember stock used to be in the Dow, but no longer. also had some pressure on Netflix today. The company struggled Bloomberg came out and said the company's struggling. about declining a time spent by subscribers on the platform. So that was a Bloomberg story and it it pressured the stock and stayed that way all day. Finished down, it was just a buck ninety-five loss, 2.96% to 6390. Let's see, Dollar General is another big mover, 3.22% decline down four dollars and twenty-seven cents to one twenty-eight. After the FTC and state partners filed a lawsuit alleging that the the retailer charged consumers more than advertised prices for numerous products. Haven't seen any comment from Dollar General yet. And over in the natural gas space, boy, they had some movement going on there today. This was came about early in the morning, the refiners specifically. agreement was obtained between range resources RRC and EQT EQT properties. EQT properties is going to acquire range resources, again, RRC and an all-star stock transaction. So that shot up RRC 17.71%, $8.06 gained to $53.58. And EQT went down just a small amount, 78 cents, 1.4% loss to $54.85. Year to date, here's where we set. SP's up 12.1%, the Dows gained 8.9%, NASDAQ rising 12.6%, and the Russell 2000 year to date higher by 12.3%. All right, you're up to date. When I come back, I'll hit the commodities, interest rates, and then we're gonna get into our topic. The December thirty first retirement deadline. Seven decisions that could save you thousands. That'll be my goal. welcome back to the John Sanchez show on News Talk 780 KOH. All we'll get to our topic, the December 31st retirement deadline in just a moment. A couple more things I want to mention in regards to today's market activity. So here's how we finished. Like I said, decent day, nothing extravagant. Finished up 146 on the Dow, point two eight percent to a close of fifty-two thousand three sixty-one. NASDAQ gained two hundred and fourteen point eight three percent, cli finished at twenty-six thousand one sixty-nine, SP up fifty-three points point seven zero percent to a close of seventy-six seventy-six. All right, told you there could have been viewed a lot of negative news today, but the market looked at it very positively with Elon Musk announcing that SpaceX is going to go another forty billion dollars in debt to acquire a bunch of NVIDIA chips and meta saying they need to borrow, you know, ninety-five billion dollars and through a st well not borrow, but obtain through secondary stock offering, etc. We also had in the and this was another major catalyst today for the upside. anthropic. They it looks like they're officially headed for the public markets and what they expect everybody expecting this thing to be as big, if not bigger, than the the largest IPO in history, which of course was SpaceX a few months ago. got a sneak peek into the the financials of the company. they are gonna list on the Nasdaq. they will trade under the symbol ANT. the the As you would imagine with a young company like this, revenues just skyrocketing. but also expenses. Expenses far, far exceeding the the revenue side of things. they re had a eighty point seven billion dollar loss in the first half of this year so far. but again, revenue of you know about a hundred and sixty one billion, I think the number was. so you know, they're they're growing, they're young. you know, I've been around a few years. Matter of fact, remember this group? only started back in twenty twenty one. So we've got five years behind them. Remember they it was a group of them that left open AI to to form anthropic and again of course the parent of Claude and so on and so forth. So hot anticipated IPO but big losses. But again this gave them the market a little bit of excitement today. on the downside, I wanted to mention this also Microsoft announced today that they have offered sixty thousand employees worldwide voluntary buyouts. Because of AI leading to efficiency push. Microsoft rose $8.09, 1.54% gain to $532.60. All right. Another thing that helped the markets today oil prices, they behave themselves down $1.41, $101.76 a barrel. Gold rose $30.50 to close at $4,037.90. And the bond market also was a nice performer. Unchanged. That's nice, in our opinion. finished at 4.99%. As a quick reminder, we do have a Fed interest rate decision on Wednesday. 11 o'clock, of course, we'll get the decision, followed by the press conference of Kevin Warsh at eleven thirty. as of this morning, I didn't see the closing figures on it, but as of this morning, there was just it was about 90.2, 90.3% probability that the Fed will not, will not increase interest rates at this Wednesday meeting. So that's another thing the streets looking forward to. All right. With that said, let's see if we can save you some money on some taxes. Again, clock strikes midnight on December thirty first. Not much you can do, right? Sure, you can still fund your IRA and for the by April fifteenth and so on and so forth. But a lot of the major things I'm gonna talk about, they need to be done before December thirty first. a lot of people, when I talk about tax strategies with them, they they tend in its human nature, they they tend to think that tax planning and tax preparation are really the same thing. And they're absolutely not. You see, tax preparation happens after the year is over, right? You get all your documents together, hand them over to your CPA. Everything's done. You can't do anything. Tax planning, of course, happens before the year ends, like where we are right now. Where you can still change the outcome. But again, we get into holidays and human nature is, I don't want to be thinking about that. So there's a moment every year when the financial decisions you made become apparent. 1159 p.m., December 31st, every year like clockwork. The government officially closes the books on your financial year. If you failed to take your required minimum distribution, can't go back and take it on time. Well, you can, it won't be on time and you're gonna pay some penalties. If you should have converted part of an IRA to a Roth, you can't go back and backdate that conversion. If you wanted an IRA distribution to qualify as a charitable distribution, you can't write a personal check in January, pretend the IRA made it in December. If you had the opportunity to realize a capital loss, make an employee retirement plan contribution, or adjust your taxable income, that opportunity may disappear when the market closes for the year. And this is where many retirees make some very, very expensive mistakes year after year. Because they believe that tax planning happens when they meet with their tax preparer in March or in April. But by then, again, tax year is over. Your accountant can calculate what happened. Your accountant can prepare the return. Your accountant can tell you what you owe. But in most cases, other than again, things like some catch-up contributions and things that we can do the following year, your accountant can't change the decisions you failed to make before December 31st. Because retirement planning is not merely about how much money you have. It's about coordinating income, taxes, investments, Medicare, charitable giving, and of course retirement accounts so that one decision does not accidentally damage another part of your plan. And boy can it do that. You have something as simple as a Roth conversion. Of course, that could reduce your future taxes. But what does it do? It could increase your current taxes when you do the conversion. It may also, as I've discussed many times with you, affect your Medicare premiums two years later via Irma. A required minimum distribution provides income, but may push more of your Social Security into a taxable column. Charitable distribution may satisfy part of your RMD, but only if the transaction is completed properly. And selling a losing investment, what we call tax loss harvesting. May reduce the capital gain, but repurchasing it incorrectly could completely eliminate that tax benefit. Every one of these decisions touches something else. So today I'm going to be discussing not tax gimmicks, not last-minute financial tricks. We're going back to the core. We're going to discuss seven legitimate planning decisions that retirees and those of you that are future retirees should evaluate before December 31st. If nothing else. If nothing else, please pick up the phone, contact your tax preparer, get in there or have a discussion on the phone, video call, in person, whatever you want to do about your year in tax planning. And hey, you know what? Your accountant may say none of these are appropriate for you. Cool. Love to hear that. That's nice and easy, right? But that should be an informed decision, not something you discover on, you know, February, March when you take in all your documents to the accountant. Because the most expensive words in year in retirement planning may be, you do the V eight slot to your head. I wish someone had told me that before December thirty first. Well, I will be that person to tell you that. We'll start when we come back. Welcome back to the John Sanchez Show on News Talk 780 KOH. All right, the December 31st retirement deadline, seven decisions that could save you thousands. That's my goal to get through all seven by the time the show ends. So let me recap very quickly for you what happened in the market if you just joined us. Once again, pretty good day today. Nothing extravagant as I keep saying. 146 gain on the Dow. NASDAQ rose 214, SP up 53. All right, here we go. We are going to start, of course, right at the top of our list. Decision number one. Complete your required minimum distribution, the RMD. So remember, if these are new to you, listen closely. And let me give you a little bit of a background on this. So if you own an IRA, a SUP IRA, simple IRA, and again, most retirement plans that you have through work, generally you have to begin at age 73 under the current law. They're looking to postpone this, but right now it's 73. You must begin what's called required minimum distribution, RMDs we're going call them, once you obtain age 73. Now, Little caveat, some workplace plans like your 401ks, et cetera, may receive a delay while you're still employed under certain circumstances, but that exception generally does not apply to traditional IRAs and all the other ones that I'd mentioned. And is also unavailable to certain business owners. So it gets a little complicated. We can't talk about today. Okay. So now let's assume you're a 75-year-old retiree. You got a million bucks in an IRA, as of remember, the previous December 31st. So If your RMD, if you're gonna be 73 this year, you actually have a little bit of a delay that I'll touch on. You actually don't have to take it out till April of next year, the year you actually year after you actually turn 73. But I'll get to that in a second. But let's say, again, you got a million bucks sitting in your IRA as of December 31st. Well, your RMD is dependent upon what's called a divisor. The IRS tells us about this, and there's all kinds of online calculators. So for a 75-year-old, the device is currently 24.6. So if you have a million bucks divided by 24.6, that's about forty thousand six hundred and fifty dollars. That must come out. But remember, that must come out by the applicable deadline. Don't make the mistake as a lot of people try doing and reach out to your broker on December thirty first and say, I forgot my RMD. I need to get it out. Because most likely they are not going to have the time to do it. Just by requesting it, does not satisfy the IRS. That money has to have come out of the account. So Keep that deadline in mind. Now, I like to call this the first year RMD trap. So someone taking their very first RMD again can generally delay it until April 1st of the following year. But here's the downside. You may go, because as I've said before when I've touched on RMDs, if you're not, you know, applicable, you know, they don't apply to you yet. What we find with our clients is I I'd say probably at least 90%, if not higher, they don't want their RMDs. They're like, I don't want to take the money out. I got to pay taxes on it. Well, you do. There's nothing. I had almost an argument with a client last week. She's like, I don't want to take my RMD. And I'm like, you don't have a choice unless you want to pay the penalty. You don't have a choice. You know, just don't. So, so they'll go, okay, I don't want to take it out. But if I do, like most of our clients, what they'll do once they take it out, they just turn around and put it right back into their taxable brokerage account from their IRA. But let's go back to the first year RMD trap. So, someone taking an RMD, again, you can wait until April 1st of the following year. But the second RMD would still be due by December 31st of that same year. So, to use this hypothetical example of this person that has to take out 40,650 their first year, well, again, they can postpone it until April of the following year. But in April of the following year, they got to take this 40,650 that they should have taken this year, plus they have to take their RMD. in this example in 2020 by December 31st of 2027. So now they're taking two RMDs. And the RMD most likely, assuming their account balance was higher than than the previous December 31st, the divisor is going to change, but the withdrawal is going to be a little bit higher or it could be significantly higher. Cause remember, it's all based upon the prior December 31st balance. So what ends up happening this first time they take their RMDs, they have to take two of them. And again, if you have, a million dollars or so in your IRA, you know, in our example here, we're talking north of 80 million, eighty million, eighty thousand dollars. That could have a significant impact on your brackets. So be very careful of of delaying it until April 1st of the following year. The cost of missing an RMD, I will tell you, some some new Laws were I believe they've already been passed. I don't think they're still the Sydney than Congress. It could improve this a little bit, but I'm not going to go into that today because I I have not had a chance to verify it. But right now, if you miss your RMD, you face a 25% excise tax. It can be reduced to 10% if it's corrected within the applicable correction window. Again, whole nother subject there. So it it's very expensive, bottom line. Very expensive to miss your RMD. Do not Do that. Okay, so there's decision number one. Did you take your RMD? Are you going to take your RMD or are you going to postpone it to the following year? All right, let's go to decision number two. Decide whether part of your RMD should become a QCD. What the heck is a QCD, John? That stands for qualified charitable distribution. Remember, as I told you a moment ago, clients don't want the money. They turn around and put it back in their brokerage account. Well, a qualified charitable distribution allows the IRA owner, who is at least 70 and a half. Now remember that's back to the old RMD age, which is now 73. But the IRA owner who is at least 70 and a half, it allows them to transfer money directly from their IRA to an eligible charity. So a properly compute completed QCD can satisfy some or all of the IRA owners' RMD. The 2026 QCD exclusion limit. Is $111,000 per eligible IRA owner. So if your RMD is $115,000, then not going to work. But why is a QCD better than writing a check? Well, if someone withdraws an IRD and later writes a personal check to charity, the IRA distribution, that's included in your adjusted gross income the year of the distribution coming out. The charitable gift may only help if the person qualifies for the deduction, and the higher adjusted gross income may affect other calculations. But with a properly executed qualified charitable donation, the QCD, we as the brokerage firm, we transfer the money from the IRA, from our IRA custodian, directly to the charity. The qualifying amount is generally excluded from income. It can count towards the RMD, which is the whole purpose behind this. And of course, it can help you dramatically manage your adjusted gross income. So these are tell you these at least. With our clients, they are not popular. I've talked to numerous clients over the years and no one seems to want to be able to do those. for whatever the reason I mean, there's numerous reasons, but just know that that's available. Again, if you've got a RMD and you're like, my God, it's gonna throw me into a higher bracket, talk to your advisor, talk to us, et cetera, about the the the qualified charitable deduction. It's very, very powerful. So let me just give you a quick example. Let's say that Sally has a thirty thousand dollar RMD and she normally gives ten thousand dollars to her church every year. Well, option one. This is not a smart tax move. Sally withdraws the $30,000, or she obtains, I should say, her $30,000 RMD. That's reported as a taxable distribution. Then she turns around and writes a separate $10,000 check to her church. Or option two, she transfers the $10,000 directly from her IRA to the church as a QCD. Withdraws the remaining $20,000 personally. And then the $10,000 QCD counts towards satisfying her RMD. So you see it's a win-win. Church gets its $10,000. Mary may only have $20,000 of taxable IRA income instead of $30,000, assuming that all the QCD requirements that I mentioned earlier are satisfied. So see, very powerful strategy. All right, decision number three. Determine whether to make a Roth conversion. And you've heard me get on my soapbox many times over the years on this one. Wall Street wants you to convert everything. Without telling you all of the bad things that can happen. Do not assume that the Roth conversion is the appropriate thing for you. But after doing your due diligence, it may be. So remember, what is a Roth conversion? That moves money from a tax-deferred retirement account, the old traditional IRA, rollover IRA, et cetera, into a Roth IRA. Now remember, the converted amount is generally taxable in the year of the conversion. But qualified Roth distributions, of course, that's the reason we want to do it. Come out tax-free. So if you have nothing but Roth IRAs, you don't even know what the word RMD needs to be because you'll never have to do an RMD if all you have is Roth IRAs. So that's why so many people, of course, in various circumstances, but many times uninformed, they will do a Roth conversion. So they take that traditional IRA, let's say it's worth 100,000, and they tell their advisor, hey, convert that over to a Roth. Advisor does not do his or her due diligence and say, hey, do you realize this is going to be taxable income and you know this year that you're doing this? They don't tell them that, and then all of sudden, here comes the tax bill at the end of the year, and you talk about an upset client, which they have every right to be. So the wrong question is should I convert my entire IRA to a Roth? The better and more appropriate and correct question is how much, if any, should I convert this year without triggering tax consequences? So you have to do the math behind the Roth conversion. What are some reasons some people might convert? Well, they feel that current tax rates may be lower than expected future tax rates, right? I've heard that argument a million times. The retiree has temporarily low taxable income. This is a good time to take a look at this option. If for whatever reason your income is low this year, but you don't anticipate it to be that way in the years going forward, that could be a reason to take a look at the Roth conversion. the retiree has retired, but not as yet, not yet has begun Social Security or obviously RMDs. So remember, start bringing that Social Security in. That's taxable income. Now you take the the the Roth conversion, that's taxable income. Again, you have to watch what brackets it's gonna throw you up into. another reason you might want to convert, again, as I just said, the conversion could reduce future RDs. Roth assets, of course, may provide much more flexible, tax-free retirement income. I mean, it is a Roth is a very powerful vehicle. And remember, you can, if you're still working, you can contribute to a Roth. 401k, right? Still not very popular, but you can do that. You don't get to put in pre-tax money, you put in after tax dollars, gross tax deferred, and then when you leave the company, you roll it over to a to a Roth conversion. And a married couple may want to convert before one spouse dies and the survivor begins filing as a single taxpayer. Like I've said, I've seen way too many people get themselves in trouble, death or divorce, and all of a sudden they go from filing joint taxes to filing single, and it's a huge, huge hit to them. All right. Now when we come back, let me go to the next one, which is number four. Intentionally realizing capital gains or losses. That's right, that's our fourth decision before the end of the year occurs. Back to the John Sancho show on NewStock780KOH. All right, let me wrap up the December 31st retirement deadlines. Seven decisions you need to make before the end of the year. All right, decision number four. Intentionally, and that's the key word, realizing capital gains or capital losses. So remember, year-end investment planning does not is, or I should say, is not automatically about selling your losers. It's doing it in a strategic manner, right? Sometimes it makes sense to realize losses as painful as it is. Sometimes it makes sense to realize gains. From a tax perspective, it could be absolutely painful. The decision depends upon your entire tax picture. So let's go over tax loss harvesting. As a reminder, capital losses can offset realized capital gains dollar for dollar. When total capital losses exceed gains. Up to $3,000 can be used to reduce your ordinary income with the unused losses carrying forward to the next year or the years going forward. So give an example. Let's say you sold a bunch of investments in your taxable account. You have realized capital gains of $50,000. But if you do it properly by December 31st and you go through and you do tax loss harvesting, you go, hey, you know what? I've got, I don't know, 10 stocks that are down a total of 20,000. Let's sell those. Realize the capital loss, which will then offset $20,000 of the $50,000 capital gain, bringing my net capital gain to $30,000. And remember, if you don't use up all your losses, they carry forward to the future years. But you must be very careful and know of what's called the wash sale rule. I've covered this many times over the years, but let's do a great refresher here. So The trick of what we do is if we go through the portfolios at the end of the year. We take a look and see, all right, which ones again do we want to sell in a taxable account? This does not apply to IRAs, which ones do we want to sell and take that loss for the client? So we'll go through, we'll do that tax loss harvesting. But we don't, you know, for example, if it's a strong year in the market, we don't want to be out of the market. So what do we do? What we do instead, of course, is Is we have to adhere to what is called the wash sale rule, which means if we sell a stock, we can't buy it back for 30 days. We like to use 31 days just to be on the safe side. That's called the wash sale rule. So as an example, if I sell Intel and I take a loss of $10,000, I cannot buy back Intel for 30 days. So again, we're going to go 31. If I do, the IRS will disallow that loss in the client's account. So what do I do? Hey, I'm still a big fan of semiconductors. So when I sell it, I take the loss. Then what do I want to do? I'm going to buy, I don't know, AMD or any other semiconductor stock. Right? Because I still want to be in the semiconductor space, but I want to take that loss. But if I really love Intel, all I do is I set a reminder in my calendar on that 31st day. If I still love Intel, then I turn around and I buy back Intel at that point. You gotta wait that 30 days. The wash sale rule, but a very, very, very powerful strategy. Again, tax lost harvesting. Go through the portfolios, see where you sit. All right, now we go to December, decision number five. Review your federal and state tax withholding. Now, as a retiree, you most likely are going to receive income from a lot of places. I mean, a lot of places: social security, pensions, IRAs, annuities, dividends, interest, capital gains, maybe rental properties. Maybe you got a part time business consulting or something like that. So a lot of different sources of income. That creates a common surprise. Every individual source appears to have a reasonable withholding, but the combined household has not paid enough. Right? You can have taxes withheld from your Social Security, from your pensions, from your IRAs, your annuities, so on and so forth. But again, you have to look at the entire picture. Remember, the federal system is pay as you go. A taxpayer who's not paid enough through withholding or estimated payments may face the underpayment penalty. And again, the IRS generally describes safe harbor protection based upon paying at least 90% of the current year's tax or 100% of the previous year's tax. And there's many other rules there, but that's all I have time to go over. As I've told you before, the biggest surprise I see with retirees, not ours, but many others that come to me say, you know what? That first year they do their taxes and they've had one full year under their belt as a retiree. They did not withhold enough or withhold any. They go to get those taxes done on it, you know. Whatever, March, April of the for the previous year, and the accountant goes, Well, congratulations. How'd you like your first year of retirement? I loved it, Fred. It was great. Well, good luck. Or guess what? You get to pay estimated taxes going forward because you underpaid the IRS. Not the way you want to start your retirement. So be very careful again with your federal and your state tax withholding. That's a great discussion to have with your accountant. Number six, protect your Medicare premium. Again, a tax decision does not stay on the tax return. Remember, I've covered this many, many times. For Medicare recipients, modified adjusted gross income can determine whether you're going to pay an unrelated business surcharge for part B and Part D. You get into the Irma surprise. Remember, it's a two-year look back. Again, whole nother subject I've done many times. Decision number seven, use the retirement contribution room you are about to lose. So if you're going to retire at the end of this year, make sure if you can afford it. Max out your 401k, your 403B, or your employer sponsor plans. Right. Remember, $24,500. If you're age 50, catch up is $8,000. If you're age 60 to 63 during 2026, you may qualify for the larger $11,250 catch up. So you do that, your spouse's still working. You can sock away a lot of money on your final year of working and help save on the taxes. I hope this helps. If you have any questions, reach out to me. God bless. Have a great afternoon. We'll see you tomorrow on the John Sanchez Show.