End of Year Financial Tips

I guess I do not have to remind you that the end of the year is quickly approaching? Holiday lights are popping up around the neighborhood and retailers are rolling out their seasonal displays. And it is only a matter of time before your social media feeds are flooded with daily reminders as well.

With all this holiday cheer in mind, I have compiled a list of end of the year tips. Whether you’re currently working and saving for retirement, approaching retirement, or embarking on new post-retirement adventures, here are some core tax, planning, and financial housekeeping things to do.

  • Be sure you have taken your RMD for the year.  Remember, RMD stands for Required Minimum Distribution.  This starts when you hit 70 ½ and goes until you pass away (actually, it could go longer with inherited IRAs, but that is for another conversation).  RMDs are not terribly difficult to calculate if you want to do it yourself.  However, be sure to take it, otherwise the penalty is 50%!
  • If you have a CPA prepare your taxes, give them a call to make sure there are not any end-of-the-year tax moves they may recommend.
  • Empty out your Flexible Spending Account (FSA), unless your employer allows some of the unused funds to be rolled over.  Please don’t confuse this with a Health Savings Account (HSA), as the FSA is geared more toward immediate health-related expenses, and includes a use-it or lose-it feature for the calendar year.
  • Consider charitable giving. Keep track of your donations to charities in all forms—and consider strategies that may qualify you for larger tax deductions.
  • Just in case you inherited an IRA, you may have RMDs to deal with here as well.
  • If someone who was RMD eligible passed away during the year and did not take out all their RMDs, you need to complete this by paying them out to the beneficiaries.  Again, 50% penalty if not done.
  • If you haven’t maxed out your 401k/403b/457 this year and can afford to, reach out to your benefits department to see if you can contribute more the last few paychecks of the year so it is maxed out.
  • It is a good idea to check your credit report for errors at least once a year to help catch fraud or reporting mistakes
  • Speaking of maxing out retirement plans, be sure to increase your plan contribution rates for next year when the retirement plan savings rates bump up.
  • Charitable IRA Contributions also need to be made by the end of the year.  This is where you can take your RMD (up to $100,000), and direct it to a charity of your choice.  If fulfills your RMD requirement and is not taxed to you.  Just make sure it goes directly to the charity.  You do NOT want it to come to you first and then you give it to the charity.
  • Be sure to check the beneficiary information on your plans.  If you have not updated the beneficiary information recently, it is a best to ensure it is up to date.  This includes contingent beneficiaries also.
  • While you are on a roll, check your personal information on all of your statements too.  You know, like the home address, phone number and current email addresses.

Take the time to give your finances a year-end checkup. Do you want to feel in control of your money and on top of things?  Doing this before year-end allows you ample time to take the necessary steps to potentially save on 2018 taxes and set up your investments for success in 2019—without putting a damper on your holiday cheer.

There are important financial housekeeping tasks that you can tackle at any time of the year, like repricing your car insurance or checking your credit reports.  But December 31 only comes once a year, and there are many key financial deadlines to meet before then.  So, get started now, and use the year-end to make tax-smart moves that can help set you up for a prosperous new year.

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