Year-End Financial Checklist
As the end of the year is fast approaching, now is a suitable time to review the last-minute things you need to address and the goals you want to pursue. In this article 5 questions to ask your financial advisor before year-end, it discusses how small changes to your financial plan before year-end can yield big results. Below is a shortened summary list of aspects of your financial life to consider as the year is coming to an end.
Investments for Retirement
If you are not already, you may want to consider contributing the maximum to your retirement accounts and health savings accounts. Review any existing retirement accounts from work to see if more can be contributed. If you are eligible to make any catch-up contributions because you are over age 50 or 55, it may be a good time also to consider making that decision. Deferring income now may lower your tax liability now and in the future.
Taxes
It is advisable to consider checking in with your tax or legal professional, especially if you have questions about an expense or deduction from this year. Also, it may be prudent to review any sales of property as well as both realized and unrealized losses and gains. Look back at last year’s loss carried forward. If you have sold securities, gather up cost-basis information. As always, bringing all this current information to your financial professional is wise.
At WPC we complete tax evaluations for our clients in November so if a withholding is needed, there is still time to make it before year-end.
Charitable Gifting
Plan charitable contributions or contributions to education accounts and make any desired cash gifts to family members. The annual federal gift tax exclusion allows you to give away up to $18,000 in 2024, meaning you can give as much as $18,000 to as many individuals as you like this year. Such gifts do not count against the lifetime estate tax exemption amount if they stay beneath the annual federal gift tax exclusion threshold.
IRA owners age 70½ and older can make up to $105,000 in tax-free charitable donations during 2024 through qualified charitable distributions (QCD’s). This year you have an opportunity to give more than past years. If you haven’t fulfilled your RMD yet and want to find a way to fulfill without increasing your tax liability, this strategy may fit your needs.
Besides outright gifts, you can explore creating and funding trusts on behalf of your family. Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional familiar with the rules and regulations. The end of the year is also a good time to review your estate plans in their entirety.
Life Insurance
The end of the year is an excellent time to double-check that your policies and beneficiaries are up to date. Do not forget to review premium costs and beneficiaries and consider whether your insurance needs have changed. Ask yourself if you may need more or less coverage in the upcoming year.
Life Events and Estate Planning
Evaluating any significant life changes in the last year:
- Marital status
- Moving
- Changing jobs
- Buying a home
- Starting a business
- Inheritance
- Gifts
- Additions to the family.
All these circumstances can financially impact your life and how you invest and plan for retirement and wind down your career or business. It is likely that you have already discussed these matters with your financial professional already, but if you have any questions, please do not hesitate to reach out to your advisor to recap previous discussions.
Everyone’s situation is unique, and these categories above are intended to provide you with some questions for reflection before the year ends.
The advisors at Wealth Planning Corporation have been planning, coaching, and advising clients on successful retirements since 1984. We have 40 years of experience preparing and transitioning clients for retirement. Learn more about our team and services at www.wealthp.com
