The end of the year can be a hectic time and likely the last thing you will want to do is take on another to-do list. That said, however, there are a handful of things that may be worth your time. Earned has compiled 3 things to check before year-end; these items are time-sensitive and may potentially lead to savings.

Maximize your retirement benefits

Since physicians get a late start on saving for retirement, smart retirement planning is essential throughout their careers. That’s why it’s important that you contribute as much as you can this year to your employer-sponsored retirement plan, up to the maximum allowed by the plan. By doing so, you may be able to take advantage of tax benefits and potentially build your retirement savings. Here are a few important considerations:

1. Physicians most commonly have access to a 401(k) or 403(b) retirement plan through their employer. These retirement accounts allow you to elect to have a certain amount withheld from your paycheck on a pre-tax basis and deposited into the account. Roth “after-tax” contributions are often allowed, as well. In 2023, 401(k) and 403(b) contributions are capped at $22,500 or, for physicians 50 and older, $30,000.
   
   
2. Most employers allow employees to change their retirement plan contributions at any time. That means you may still have time to increase your final contribution in 2023 to hit the contribution limit for the year.
   
   
3. One tax-advantageous retirement plan that is commonly missed is a 457(b). Physicians that work for tax-exempt organizations like a hospital or government entity are often eligible for these types of plans, which allow employee contributions up to $22,500 for 2023 (or 100% of gross annual compensation, if less). For example, University of California physicians may contribute up to the maximum to BOTH the 403(b) and the 457(b) plans. That’s a total of $45,000 additional retirement contributions.
   
   
4. In addition, some hospitals offer retirements above and beyond the core retirement accounts noted above; Earned analyzed a sample of top hospitals to showcase some additional offerings that physicians might overlook. 
   
   
5. To save additional retirement dollars beyond your employer-sponsored retirement plan savings, you may want to consider a Backdoor Roth. The Backdoor Roth allows physicians to contribute to a Roth IRA despite often exceeding the income limits. This involves making a nondeductible contribution to a traditional IRA and subsequently converting that amount to a Roth IRA. There are multiple benefits to maximizing a Roth, including tax-free gains and withdrawals, no minimum distributions after a certain age, and ability to pass down to heirs without triggering tax penalties.
   

Harvest losses in taxable accounts

Tax loss harvesting is a strategy that can help lower your overall tax bill by selling investments that have lost value in your taxable accounts to offset taxable gains from other investments. Loss harvesting presents a “silver lining” for physicians to take advantage of declines in the market and individual securities. These tax savings may potentially provide more dollars to reinvest in your portfolio. Here are a few things to keep in mind:

• Given the market’s volatility, some of your investments may be trading in negative territory, providing opportunities to harvest losses in your taxable investment accounts.
• Beware of the “wash sale rule” which states that a loss cannot be realized for tax purposes if a substantially identical position was bought within 30 days before or after the sale. However, you can immediately purchase a similar stock as long as it is not substantially identical. For example, if Coke was sold at a loss, Pepsi could be purchased in its place.
• Any losses that you don't use to offset gains in the current year can be carried forward and used to offset gains in future years.
• With the support of advanced technology, Earned proactively monitors client’s taxable accounts for tax loss harvesting and reinvesting opportunities. Earned also provides clients with reporting that shows their actual tax savings throughout the year.
  

Assess how you donate to charities

Donations may potentially help to reduce your taxable income while also supporting a cause you care about, but it makes sense to assess whether you can better optimize your donation strategies to help save on taxes.  Some considerations include:

• Donate highly appreciated stock instead of cash. If the shares have been held long-term (for example, longer than one year), you can bypass capital gains tax and get fair market value deduction.
• One overlooked option is known as the “bunching” strategy. Individuals or couples who typically take the standard deduction can bundle multiple donations at once, thereby itemizing deductions in a single tax year and forgoing charitable contributions in later years.
• During higher income years, charitably inclined taxpayers may wish to use a donor-advised fund to recognize a larger current-year deduction while making charitable grants at a future date and at a pace of their choosing.
• Physicians who are nearing retirement and who expect a significant drop in taxable income post-retirement might consider accelerating charitable donations (either directly to charity or to a donor-advised fund) prior to retirement to maximize itemized deductions while in a higher income tax bracket. 

As physicians are typically high-earners, adopting strategies to take advantage of tax savings can compound over a lifetime.  Some strategies, like maximizing your retirement plan contributions, should likely be on auto-pilot and repeated every year, while others like donating appreciated stock instead of cash and bunching charitable deductions, can be especially considered in years of higher income.