Year End Financial Planning Checklist

It’s hard to believe we’re on the precipice of yet another new year but, here we are. Temperatures are dropping, family get-togethers are being organized and, pretty soon, coffee shops will be filled with the familiar echoes of holiday music. Before the hustle and bustle of the holiday season takes over entirely, it’s important to take a moment and make several year-end planning items a priority. Below is a checklist of eleven items you should examine, which can help secure your financial plan as we transition into the new year:

1. REVIEW YOUR FLEXIBLE SPENDING ACCOUNT BALANCE: Understanding the details of your FSA plan is essential to not letting any unused dollars to go to waste. Some plans have a “use it or lose it” benefit, while others provide more flexibility. If your account has a surplus – and you need to spend it before year end – the FSA store is a great resource.
2. SATISFY YOUR MINIMUM REQUIRED DISTRIBUTION: Once you reach age 72, or if you have an inherited IRA, you must take a minimum distribution from certain tax-deferred accounts – including traditional IRA’s – by December 31st. The IRS can levy a 50% penalty on any amount not withdrawn so it’s critically important to not miss the deadline. 
3. CONSIDER A ROTH CONVERSION: If a Roth conversion is a part of your financial plans and you want to include the income on your return for this calendar year, you need to complete the process before year end. 
4. REVIEW IRA AND RETIREMENT PLAN CONTRIBUTIONS: Retirement plan and IRA contribution limits are adjusted annually for inflation. If you plan to maximize your contributions, it’s important to take note of these changes as we head into the new year, so you don’t fall short of the new limits. This may require an update to payroll deductions and / or automatic savings plans. 
5. REVIEW YOUR EMERGENCY FUND: As a general rule, you should set aside at least 3 to 6 months’ worth of essential expenses to protect against an unforeseen emergency. The balance you retain will vary depending on several factors – income, expenses etc. – so it’s important to review annually and adjust as necessary. 
6. CONFIRM YOUR TAX WITHHOLDING: Ordinary life events can impact your tax obligations. Some give rise to more taxes; others may lower your liability. To avoid large unforeseen tax bills or refunds, we recommend you talk with your tax professional to confirm how much should be withheld from your paycheck as we transition into a new year. 
7. REVIEW YOUR BENEFICIARY DESIGNATIONS: Beneficiary designations play an essential role in ensuring your assets are transferred according to your overall estate planning goals. These designations often go unnoticed when we experience changes in our financial priorities. To steer clear of any unwanted outcomes, review your current instructions and make any needed updates or adjustments.
8. CONSIDER HARVESTING TAX LOSSES: Tax loss harvesting is the process of selling investment holdings at a loss and replacing them with new or similar investments, to offset previously realized gains. Not only does this lessen your tax liability, but it also provides you the opportunity to better position your portfolio going forward. You need to complete all of your harvesting before the end of the calendar year so now is a good time to begin reviewing if this strategy is right for you. 
9. EVALUATE YOUR BUDGET: Performing an annual review of your budget will help control spending habits and monitor savings patterns, both of which are essential to long term financial success. A variety of factors can trigger changes in your budget, including inflation and / or modifications to income. Reviewing the budget periodically will help ensure you remain on track. 
10. REVIEW YOUR CHARITABLE INTENTIONS: Charitable giving not only helps support the causes that we hold dear, but it may also lead to increased tax savings if you itemize your deductions. If you intend to make a charitable contribution, it’s often necessary to plan well in advance. At the very latest, donations need to be received and processed by December 31st. Verify deadlines with your donee to ensure your bequests are sent in time for processing. 
11. REVIEW YOUR EMPLOYEE BENEFITS: Open enrollment, typically a 2–3-week period towards year end, is an opportunity to review and secure your benefits for the upcoming year. Needs change as financial circumstances change so take the time to research your options carefully before making your selections.
    
    

​If you have any questions or need some assistance with getting started, please let us know.

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Mark Farrelly CFP®, ChFC®, CDFA®
​Senior Advisor And Director Of  Financial Planning

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