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Top 12 Tips: A Year-End Financial Checklist

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Personal Finance

November 15, 2021

Top Twelve Tips: A Year-End Financial Checklist

Find time for your financial health in your holiday plans.

The end of the year always seems to sneak up on us. After Thanksgiving, the buzz of the holiday season keeps us busy through the New Year and tax season probably isn’t even a distant thought yet. But there are a number of reasons to make year-end financial and estate planning a priority because once the year turns over there’s no going back.

Here are twelve valuable tips to make sure you act on, if needed, before the end of the year so you can head into next year feeling confident about your financial health:

1) Check Your Flexible Spending Account (FSA) Balance or

Contribute to Your Health Savings Account (HSA)If your employer plan does not allow rolling money over into the next year, make sure you spend the balance on qualified expenses so you don’t lose out.

2) Take Your Required Minimum Distribution

If you don’t take your RMD from accounts that require it, you could be subject to penalties and taxes.

3) Make a Qualified Charitable Distribution (QCD)

If you make a QCD from your IRA, you may reduce the amount of tax owed.

4) Prepay Charitable Gifts

‍Thinking ahead about next year’s charitable gifts may allow for a larger tax deduction this year if you pay out the money this year.

5) Select Next Year’s Employer Benefits

‍Open enrollment is typically in December. Consider taking advantage of all available options, including a Flexible Spending Account (FSA), Health Savings Account (HSA), life insurance, and more.

6) Review 401k and IRA Contributions

‍Maximizing the amount you contribute allows you to take advantage of available tax deductions and employer-matching contributions.

7) Consider a Roth Conversion

‍If you’re unable to contribute to a Roth IRA directly because you don’t qualify, you may benefit from contributing to a Traditional IRA and then converting the funds to a Roth IRA.

8) Review Any Tax Losses

‍If you have stock positions that have lost value, consider selling them to offset gains and reduce taxable income. Remember that the IRS only allows $3,000 of losses per year. You should try to be proactive in your tax planning. Learn about some common and not-so-common tax questions here from Debt.com

9) Plan for Life Events

‍A job change, home or car purchase, surgery, or other life event requires planning ahead, where possible.

10) Review Your Estate Plan

Ensure your overall estate plan, including your will, trust, and health care power of attorney, are current.

11) Review Insurance Policies

‍Review your home, auto, and life insurance policies to determine if you have enough coverage or if deductibles need to be adjusted.

12) Review Your Beneficiaries

‍Double-check if changes or updates are needed on your accounts. It’s all too common to leave an ex-spouse, for example, assigned accidentally.

The most important decision you can make as the year comes to a close is to speak with a financial professional to ensure everything is in order with your overall financial situation. There's still time left in the year to take action if needed, but time is running out.

If you'd like a year-end review of your financial situation or if you have questions regarding year-end strategies, we encourage you to schedule a call with a Bayntree financial advisor.

Bayntree Wealth Advisors, located in Phoenix and Scottsdale, Arizona, provides comprehensive financial planning and wealth management. The Bayntree team specializes in all aspects of financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning, and insurance.

Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance on your individual situation.

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