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A big tax break for socially responsible investing

Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

Morningstar: Retirees' year-end tax-planning guide
As 2018 comes to a close, retirees who are at least 70 ½ should make sure they take mandatory distributions from their tax-deferred retirement accounts before December 31 to avoid any trouble with the IRS, writes Morningstar's Christine Benz. They should also consider selling depreciated holdings in taxable accounts and use the losses to offset capital gains. Those who are in the 0% tax bracket may want to sell securities that rose in value since they’ll owe no taxes on the capital gains. Retirees should also watch out for capital gains distributions from their mutual funds, as these could trigger other taxes.

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The New York Times: A big tax break for socially responsible investing
So-called opportunity zones created under the new tax law offer a chance for investors to save on taxes, according to The New York Times’ Paul Sullivan. However, not all of these circumstances are created equal. Investors should do their due diligence before making any investments. “It makes sense to identify those areas where, with a substantial amount of capital, those communities can change. It doesn’t make sense to put money into areas where the capital won’t come out,” Sullivan writes.

Kiplinger: Setting realistic expectations isn't easy during record-setting bull market
Investors are advised to adjust their expectations and possibly their portfolios, as returns are likely to dwindle in the foreseeable future, writes advisor Anthony Pelligrino for Kiplinger. This means clients should consider rolling over some of their 401(k) assets to an IRA, which can offer a broader investment menu. "A nontaxable rollover to an IRA would give you more freedom to work with your financial adviser in choosing investments," says Pelligrino.

U.S. News & World Report: Investors face new rules to convert an IRA
Although retirement investors can still convert traditional 401(k) and IRA assets into a Roth, they will no longer be able to undo the conversion under the new tax law, according to U.S. News & World Report. Clients are advised to understand the new rules before making decisions. "We have new tax rates, tax brackets, new standard deductions, lost exemptions and new AMT rules. It's a different ball game that requires detailed planning to avoid unintended tax consequences," says contributor Jeff Brown.

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