Year End Planning Strategies
I hope you are all enjoying the brisk fall weather.
As the year draws to a close, it’s the perfect time to review your financial situation and make sure you're taking full advantage of opportunities to maximize savings, reduce taxes, and set yourself up for success in the coming year. Here are some essential year-end financial planning tips to consider:
1. Maximize Retirement Contributions - Review your contributions to retirement accounts like 401(k)s or IRAs. The 2024 limits for 401(k) contributions are $23,000 (or $30,500 if you’re 50 or older). If you haven’t reached these limits, now’s the time to contribute more and take advantage of tax-deferred growth.
2. Consider Tax-Loss Harvesting - If you have investments that have lost value, you can sell those assets to offset capital gains from winners, reducing your taxable income. Just be mindful of the wash-sale rule when repurchasing similar investments.
3. Review Charitable Giving - Donating to charity can be a great way to give back and reduce your tax bill. Make sure to review any planned donations before the end of the year. You can also consider donating appreciated stocks, which could give you a larger deduction while avoiding capital gains tax.
4. Take Required Minimum Distributions (RMDs) - If you’re 73 or older, make sure to take your required minimum distributions (RMDs) from your traditional IRAs or 401(k)s before the year ends to avoid penalties. If you're not yet at that age, you can still use this time to review your long-term withdrawal strategy.
5. Evaluate Your Health Savings Account (HSA) Contributions - If you have an HSA, be sure to maximize your contributions before year-end. HSAs are triple tax-advantaged: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free.
6. Review Your Estate Plan - Year-end is a great time to review your estate plan. Make sure your beneficiaries are up to date, and consider gifting strategies if you're looking to reduce estate tax in the future. The annual gift exclusion allows you to give up to $18,000 per recipient in 2024 without triggering gift tax.
7. Take a Fresh Look at Your Budget and Goals - Use this opportunity to review your personal or family budget. Are there adjustments you can make to better align with your financial goals? Setting new priorities or revisiting your savings goals can set the tone for a financially healthy year ahead.
8. Consider Roth IRA Conversions - If you're in a lower tax bracket this year, consider converting some or all of your traditional IRA into a Roth IRA. You'll pay taxes now, but Roth IRAs grow tax-free, and withdrawals are tax-free in retirement, which can be beneficial if you expect to be in a higher tax bracket in the future.
9. Utilize Flexible Spending Account (FSA) Balances -If you have an FSA, make sure you use the funds by the deadline. Some plans offer a grace period into the new year, but it’s essential to check and ensure you don’t lose out on any unspent funds.
10. Plan for 2025 Early - Once you’ve wrapped up your 2024 planning, take some time to look ahead to 2025. Setting your goals early allows you to adjust your investment and savings strategies as needed, ensuring you're prepared for what’s to come.
Let’s Chat About Your Year-End Strategy
If you’d like to review any of these strategies in more detail or discuss how they apply to your personal situation, I’m here to help. Let’s schedule some time to make sure you’re on track for a strong financial finish to the year. As always, please let us know if you have any questions or concerns. We're looking forward to seeing you soon!
