To prepare for tax season, here are a few things you will need to keep in mind. Should any of these circumstances apply to you, please notify your advisor to discuss your account.

  • Federal and State Voluntary Withholding – If you have had a change of address in 2017, you must notify your advisor by December 15, 2017, to ensure that withholding amounts can be corrected within the same tax year. It’s recommended that you review your account transactions regularly with your advisor to verify that withholdings on distributions have been properly applied.

LPL is not able to reverse or apply any federal and state withholding in 2018 on distributions that occurred in 2017 for Individual Retirement Arrangement (IRA) and Qualified Retirement Plan (QRP) accounts. Federal and state withholdings will be reported in boxes 4 and 12, respectively, on IRS Form 1099-R, and these tax payments may be claimed as dollar-for-dollar credits on your tax returns.

  • Required Minimum Distribution – You are required by the Internal Revenue Service (IRS) to take a required minimum distribution (RMD) by April 1 of the year following the calendar year in which you reach age 70 ½ and each year thereafter from your retirement accounts. The first year following the year you reach age 70 ½ you will generally have two required distribution dates: an April 1 withdrawal (for the year you turn 70 ½), and an additional withdrawal by year end (for the year following the year you turn 70 ½). To avoid having both of these amounts included in your income for the same year, you can make your first withdrawal by year end of the year you turn 70 ½ instead of waiting until April 1 of the following year. If you’re already meeting your RMD requirements elsewhere and therefore do not need to take a distribution from LPL, the IRS still requires that LPL furnish this information. If you need to make an RMD, please contact your financial advisor to help you request this distribution.

RMDs generally are determined by dividing the prior year-end IRA balance by the life expectancy factor (or distribution period), as defined in IRS tables. RMDs during your lifetime are based on a distribution period that can be determined using the Uniform Lifetime Table and your age. The distribution period is not affected by your beneficiary’s age unless your sole beneficiary (for the entire year) is your spouse who is more than 10 years younger than you. If these assumptions are not accurate, please contact your financial advisor for a new RMD calculation.

Please note: If your IRA is holding assets in which the values are not readily ascertainable on an established exchange or generally recognized market, your ability to rely upon the year-end account balance as a basis for computing the required minimum distribution relating to your IRA will depend upon such balance reflecting the fair market value of such assets. Please review the value shown for any such asset on your year-end account statement and provide any other valuation information you may have for such asset to your financial advisor so that a new RMD calculation can be made. (Please note that neither LPL Financial nor the Custodian of your IRA is responsible for any loss resulting from the valuation of any such asset.)

  • Gifting – Charitable giving is one way you can positively impact your current tax position. You may gift shares from an LPL account to a third party as a charitable donation. To facilitate a year-end gifting request, please contact your advisor. LPL must receive signed instructions from you no later than December 15, 2017, to ensure that the gifting of shares takes place and settles in the desired account by year-end. Any request received after December 15, 2017, will be processed on a best-efforts basis.

*Share may be gifted from an LPL Financial non-retirement account to a third party (shares held directly with transfer agent) using the Accommodation Transfer form (F30). F30 must be received by November 10, 2017.

  • Roth Conversions – You may want to contact your advisor before the end of the year to discuss the details of converting your existing IRAs to a Roth IRA. You’re likely aware of the benefits of Roth IRAs: tax-free withdrawals in retirement, no required minimum distributions, and the option to leave an income-tax-free legacy to the next generation. To process requests by December 29, 2017, we must receive completed request forms by December 15, 2017. Any requests after December 15, 2017, will be processed on a best-efforts basis.

*Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.

  • Cost Basis – Your cost basis must be adjusted for certain events such as: corporate action, wash sale, return of capital, liquidating distribution, OID accrual, partnership distribution, undistributed capital gain, bond premium amortization, market discount accrual, dividends effective for prior year (i.e. mutual funds), etc.

Also, if you have any securities transferring from another firm, please be sure to have the cost basis transferred before December 15, 2017. Please contact your financial advisor if you have any questions.

Finally, please keep in mind that any fixed income elections for the upcoming year (2018) must be made by close of business on December 15, 2017. This may affect tax reporting for fixed income on the 1099-INT. Please contact your financial advisor if you have questions.

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