With the year coming to an end, you’ll likely see dozens of articles suggesting ways to reduce your taxes and improve your portfolio. If you’ve been engaged with our newsletter for a while, you know we favor making regular tweaks throughout the year to minimize taxes and maximize total return over the long-term. That said, we love a good tip or trick just as much as the next guy, so we’ve compiled a few of our favorites you can implement in December to help reduce your tax bill in 2019.

INCREASE YOUR RETIREMENT PLAN CONTRIBUTIONS

The maximum amount you can contribute to an employer retirement, such as 401(k), is $19,000 for 2019. If you are age 50 or older, you can take advantage of an additional “catch-up” contribution of $6,000. Likewise, you can contribute a maximum of $6,000 to an IRA with an added $1,000 if you are 50 or older. Generally, you have until December 31, 2019, to contribute to an employer retirement plan and until April 15, 2020, to contribute to an IRA.

If you are self-employed, you may want to consider establishing an individual 401(k). The plan must be established and partially funded before year-end and should be done under the guidance of a CPA.

USE HSA TO PLAN FOR FUTURE HEALTH CARE COSTS.

For those with a high deductible health insurance plan, you are eligible to contribute up to $3,500 and $7,000 for families in 2019 ($8,000 if you are age 55 and over) to a Health Savings Accounts. Similar to a 529 plan, contributions made to an HSA grow tax-free and withdrawals used to pay for qualified medical expenses are also tax-free.

FUND A 529 EDUCATION SAVINGS PLAN

Contributions made to a 529 plan grow tax-free and withdrawals made for qualified education expenses are also tax-free. You can give up to $15,000 per beneficiary each year ($30,000 from a married couple) without filing a gift tax return. With some restrictions, it is possible to give more with “superfunding” (5 years at one time.)

DONATE TO CHARITY USING APPRECIATED STOCK

If you itemize on your tax returns, giving away appreciated stock allows you to not only deduct the full market value of the donation but also avoid paying capital gains on that appreciation. If you make donations on a regular annual basis but do not qualify to itemize, you may consider putting several years of gifts in a donor-advised fund. This may allow you to itemize your deductions in the current year while maintaining control over the specific timing of your donations to qualified charities over time.

Among the many reforms found in the new tax law, one last-minute change allows families to begin using their 529 Plan savings to pay for their children’s K-12 tuition (up to $10,000 per beneficiary, per year). Until now, 529 Plans could only be used to pay for qualified higher education costs.

Since private schooling is expensive, you may be tempted to tap into this new, tax-sheltered funding source as soon as you’re able.

But should you?

The answer is: It depends.

What’s the highest, best use of your 529 plan assets?

The main reason you squirrel away money in a 529 plan is to protect your investments against taxes, and the debilitating effect they have on your end returns. With their tax-preferential treatment, your 529 plan savings are expected to grow bigger and faster than if you held that same money in a taxable account.

Thus it stands to reason, the longer you keep your money invested in a 529 account, the better you’re leveraging its tax-sheltering benefits.

In this context, among the best applications for a 529 plan remains the same as before: to start setting aside money when your kids are in diapers, in anticipation of that bittersweet day they head off to college.

That said, life doesn’t always go as expected. The new K-12 spending allowance may be ideal if you end up with “extra” funds in a 529 plan. For example, what if your firstborn decides to attend an in-state university instead of Harvard? Or what if she earns a full scholarship to her first-choice institution! It may make sense to use up the leftover 529 money on her younger brother’s high school tuition, especially if he already has a fully funded 529 plan of his own.

Where do you live?

There’s an added wrinkle to consider before taking money from a 529 plan for K-12 tuition. As this Forbes article describes, qualified 529 plan withdrawals for K-12 tuition may now be tax- and penalty-free on your Federal tax return (thanks to the 2017 Tax Cuts and Jobs Act). But your state tax laws may differ.

Which brings me back to my initial answer. Should you spend your 529 plan assets on K-12 costs? It depends.

You know all those tax season emails you get from Charles Schwab, informing you that your Form 1099s are ready to download and share with your tax professionals?

Hill Investment Group clients can largely disregard those notices, because we take care of this busy-work for them. We aggregate the 1099s for the accounts we manage for them, and send the documents to those who need them, safely, securely and without our clients having to lift a finger. (Unless you count that single click to delete the email notifications.)

This is just one way we strive to simplify our clients’ busy lives, so they can focus on the things that are important to them.