Thanks to the "fiscal cliff," it has been a busy month for retirement planning experts.
Anna Pfaehler, a certified financial planner professional with Palisades Hudson Financial Group in Scarsdale, N.Y., says, "We've fielded a lot of email and worked with customers here in the office who are getting ready."
She can give best-guess advice, but until Congress comes to a decision, there will be open questions. "The month is still young, and I don't think we'll have clarity until the very end. It has been tough all year to advise clients because of the climate," Pfaehler says.
Given the uncertainty, what should someone planning for retirement do? Pfaehler suggests some steps that make sense no matter what happens in Washington.
Consider converting to a Roth IRA in December. You can bet on an increase in taxes somewhere along the line, even if it isn't in 2013. If you think your income will be higher next year than this year, you have even more motivation to make a conversion before the end of the year. There's not much risk. If you decide that the conversion was a bad idea for whatever reason, you can convert back -- recharacterize, as the IRS calls it -- as long as you do it by Oct. 15, 2013.
Delay donations of appreciated securities. If you were considering donating stocks, bonds or mutual funds that have appreciated in value, which you've held for more than a year, hold off until 2013 when the capital gains rate is almost certain to rise. If that happens, your donation will have more value as a tax deduction.
Don't forget RMDs. If you're older than 70 ½, take the required minimum distributions or RMDs from individual retirement accounts and other retirement plans. The penalty for failing to take an RMD is steep -- 50 percent on the amount not withdrawn. The year you turn 70 ½, you have until April 1 of the following year to take the RMD. After that, the deadline is Dec. 31.