The new year opened with a government shutdown, trade wars, market volatility, and a potential recession on the horizon. How will you weather these storms?

We recommend that you focus on fundamentals and offer seven concrete actions to take in the first quarter of 2019 to keep your personal and financial goals on track. Also, because behavioral scientists have found that sharing your goals with others is one of the best ways to make sure good intentions are carried out, you may want to have this conversation with your J.P. Morgan advisor.

What goals—near or long term—do you want to achieve, and is your strategy helping you to achieve them? The beginning of the year is a good time for you to review your financial and estate plans to make sure that whether it’s market movements or a change in your situation, your plans are doing what you want them to do.

Your J.P. Morgan advisor is available to work with you, your spouse, your estate planning lawyers and your other advisors to help you get it right.

If you are going to gift this year, doing so early in the year is usually financially advantageous, particularly if you think the market will go up (as we do). You can make tax-free gifts of $15,000 ($30,000 for a couple) to as many individuals as you want in 2019.

And, if you are thinking of making gifts to a 529 account, you can make five years’ worth of gifts—$75,000 in total or $150,000 for a couple—this year. Keep in mind that you cannot make any additional tax-free gifts to the beneficiary of that 529 account—into that account or otherwise—until 2024.

In addition, both you and your spouse each have a lifetime gift tax exclusion that, in 2019, is $11.4 million. That is $220,000 more than last year (due to inflation adjustments). So, even if last year you used your entire gift tax exclusion, you (and your spouse, each) can give another $220,000 in 2019 without incurring gift tax.

It’s the Internal Revenue Service's last call for 2018. You have until the filing date (April 15, 2019, for many) to make contributions to a traditional or ROTH IRA if you did not max out on your contributions during 2018.1 And, if you turned 70½ in 2018, you have until April 1, 2019, to take your 2018 required minimum distribution (RMD) from an IRA. (You have until December 31 to take your 2019 RMD). Remember, if you are over 70½, you can direct up to $100,000 of your RMD to a qualified public charity (but not a donor-advised fund) of your choosing and exclude that donation from your gross income, though you would not get a charitable deduction for this type of donation.

Are your loans, mortgages and otherwise, structured appropriately for this stage in the economic cycle? Whether it’s resets in the interest rate you pay, the collateral supporting your loans, or impending maturities, we recommend reviewing your loans and considering how best to position them for the next three to five years.

The first year under the new tax law was 2018. For many people, that means tax brackets and, as a result, taxes due, have changed. In response, you should consider modifying the amounts your employer withholds, or pay estimated taxes quarterly. It is important to review these amounts with your accountant, especially now that your 2018 tax liabilities are fixed.

Start the year off with new passwords. Changing passwords regularly—and making sure they are adequately unique and complex—is one of the best defenses against identify theft and fraud.

Recent market volatility has created opportunities. Yes, you can invest to take advantage of sudden, short-term price dislocations, but, also, unexpectedly low values allow you to give to (or place "in trust" for the benefit of) family members using less of your lifetime gift tax exclusions. Then, when asset values rebound, those increases will not be part of your estate.

Speak to your advisors so that you are prepared to take advantage of sudden movements—because prices often snap back quickly.

 

1 The 2018 contribution deadline to a SEP IRA is 10/15/19, if a business owner elects to extend the company’s filing deadline until then.