Mid-November is the perfect time of year to get your financial affairs in order. The holiday busy season hasn’t cranked up yet, but the days are shorter and many weekend days are rainy and cool. This year, let’s make it a priority to get your affairs in order before the year-end deadlines strike and it’s late.
Here’s a checklist for financial matters to consider before year-end.
- Fund retirement accounts – The last day to fund an employer-based retirement plan such as a 401-k plan is normally December 31. Have you assessed your 401-k contributions in light of all of your income for the year – even non-salary related income? For example, if you sold an investment during the year in a taxable investment account, perhaps you’d like to reduce your capital gains taxes by contributing more than usual to your 401-K. Also consider contributing some of your holiday or year-end bonus if you receive one.
- Review investment allocations – Investment allocation adjustments are an important action item to review at least once per year! Are your investments properly allocated between large cap equities, small and mid cap equities, international stocks, or bonds based upon your age, goals, and risk tolerance? Is today a good day to rebalance your account?
- Offset any capital gains with capital losses – Consider selling any investments with losses to offset any capital gains you have for this year in your taxable investment accounts.
- Optimize charitable giving – You need to make contributions before year-end in order for them to be deductible from your taxable gross income for that year. Consider reviewing what you donated to last year, and keep the good vibes going. Also, consider an in-kind gift of shares of stock so you can make a donation without realizing the capital gains.
- Manage college funding and expenses – If withdrawing money from your 529 Plan for educational expenses, make sure expenses are paid for by the end of the year. Also, make sure you keep documentation for reconciling educational spending.
- Review health insurance spending accounts – Use the remaining balance in your Flexible Spending Account for qualified medical expenses by end of the year. If you’re contributing to a Health Savings Account, consider maximizing your annual contribution ( $3,600 for single and $7,200 for family for 2022; $3,850 and $7,750 for 2023). Review your medical expenses this year to see if you need to adjust health insurance coverage for next year.
- Review employer benefits – Has your employer added any benefits you should take into consideration? Has your situation changed such that current benefits might could help you? For example, have you taken advantage of legal service discounts if offered so that you can get your Estate Planning documents in order?
- Get your tax files in order – We know that taxes are due in mid-April – so why not get ahead and begin gathering the documents you’ll need to prepare your return?
- Estimate your taxes and begin saving for the payment – Many of us enjoy getting a tax refund, but unfortunately not all of us. Some of us will owe taxes. If you’re one of those, this is a good time of year to estimate your taxes and make sure you have the cash to make the payment.
Ok that’s it for now. I hope this helps. Providing advice and guidance for these and many other financial matters is right down Tilly’s alley. Please contact us if you have any questions.