5 Year End "To Do's"

Photo by AJ Cann

Photo by AJ Cann

Happy Black Friday! Now that we have given thanks for all of the blessings for which we are grateful, the holiday shopping season kicks into high gear. There are deals to be had for those of you that camped overnight at the local mall.  If you slept in this morning (or had to go to work like some of us), there is still a month to save some money by tending to a few financial "To Do's"  before year end.

Review Your Investment Portfolio - Year end is a great time to review your investments to see if it may be a good time to re-balance your allocations. During the review, you should confirm that your investment mix is still appropriate for your goals. If the mix has drifted too far off target, now is an ideal time to re-balance. If you have any stinkers in the mix, you can also consider selling some losers to generate a tax write off or to offset other capital gains.

Pay Yourself First - Are you getting the most from your retirement accounts? If your employer offers a matching contribution, you are passing up free money if you aren't contributing up to the matching amount. If you are getting a year-end bonus or raise, use this opportunity to increase the amount you are saving in your retirement accounts. If you are 50 years old or more, there are probably "Catch Up Contributions" available to allow you to save even more. You not only will be increasing your savings, but you may save some tax money, too.

Check Your Beneficiaries - This is a simple administrative task, but is a crucial step in insuring your estate plan will work as you intend. If you want your state or the IRS to get more of your inheritance, not naming beneficiaries is a great way to increase their share.

A more common problem is not updating beneficiaries after deaths, divorces, births, etc. These designations are considered contractual and supersede your will. 10 minutes a year on this task can save a lot more than money. Don't believe me? Check out this Accountable Update from earlier in the year.

Don't Forget Your Required Distributions - For most folks, if you are 70.5 before year-end, you are required to distribute some money from your retirement accounts. The penalty for not taking the Required Minimum Distribution (RMD) can be 50% of the amount not taken, so it is very prudent to always confirm that you have satisfied the requirement. Mistakes can often be made when inheriting an IRA or when accounts have been transferred from one company to another, so be especially mindful if this applies to you.

Use Your Flexible Spending Account (FSA) - If you set aside money in an FSA and have more than $500 left at year end, you need to use it or lose it. Here is a list of eligible expenses.

If all of this is a little much, give us a call if you would like some help. Happy Holidays!