Smart Financial Moves to Make Before Year-End
As we enter the final quarter of the year, now is an ideal time to take stock of your finances and make sure you’re on track before December arrives. Reviewing your tax situation, retirement savings, and other key financial areas in the fall can help you make thoughtful adjustments — without the rush that often comes later.
The following ideas are not one-size-fits-all. What’s best for you depends on your unique situation. Before acting on any of these strategies, be sure to consult a tax professional to confirm they align with your goals and circumstances.
Here are 10 financial planning ideas to consider before year-end:
Required Minimum Distributions (RMDs)
If you’re of RMD age or a non-spousal IRA beneficiary, confirm the required withdrawal amount and deadlines to avoid penalties. A little planning can make a big difference in your financial outlook.
Roth Conversions
Depending on your financial situation, converting to a Roth IRA could be advantageous. Paying taxes now may save you from paying taxes on future gains, especially if you expect tax rates to be raised to higher levels later. If you do believe that to be likely, “filling out” the “top of the bracket” you’re in now with a conversion will cost you a bit more in taxes this year, but will not “bump you into a next bracket.” This concept reminds me of a financial maxim I once heard “an unused bracket it a terrible thing to waste!”
Tax-Loss Harvesting
Offset capital gains by reviewing your portfolio for potential losses. Harvesting losses can help reduce your taxable income while keeping your investment strategy intact. With the good year that 2024 has been for many assets, you may find slim pickings for harvesting, but if you’ve not looked for these opportunities in a while, you may be surprised at what you find, and for any losses you DO have, there are techniques for keeping exposures aligned while still recognizing any losses you may be showing for now.
Charitable Giving
Beyond cash donations, explore opportunities like employer gift matching, donating appreciated securities, or making Qualified Charitable Distributions (QCDs) if you’re over 70-1/2. QCDs can satisfy RMDs while lowering taxable income because funds going directly to your favored charity do NOT get counted within your taxable income. And with higher standard deductions and fewer folks qualifying to itemize, this could be a path to restoring the impact of charitable giving to your tax bill if you are old enough to use this provision.
Expense Timing
Prepay deductible expenses like January’s mortgage payment or property taxes to reduce your current year’s tax liability.
Flexible Spending Accounts (FSAs)
Don’t let your hard-earned funds go to waste! Use any remaining FSA funds before the deadline, or check if your plan allows carryovers.
IRA Contributions
While the deadline for IRA contributions extends to Tax Day, year-end is a good time to evaluate your contributions and plan to maximize them for both the current and coming years.
College Planning
Maximize 529 plan contributions to take advantage of state tax benefits. Grandparents and other family members may also consider gifting to 529s as part of their estate planning strategy.
Gifting Strategies
The annual gift tax exclusion allows you to gift up to $19,000 per person in 2025 without triggering gift taxes. This can be a tax-efficient way to support loved ones.
Meet with Your Financial Professional
Now is an ideal time to review your financial plan, reflect on your goals, and make adjustments for the year ahead. A tax professional can also provide tailored advice to ensure these strategies align with your needs.
Take the Next Step
If any of these ideas resonate with you but you’re unsure where to start, we’re here to help. Reach out today to schedule a complimentary consultation and ensure your plan is optimized before year-end. A little preparation now can help you enter the new year confident and ready for what’s ahead.
