Your Year-End Financial Checklist | Tips From Our Financial Advisors
This time of year is all about making lists and checking them twice! As we wrap up 2024, now is the perfect time to address any last-minute tasks and reflect on your goals for the future. Here are some important financial considerations to explore as you transition from this year to the next.
*Please note that this article is meant for informational purposes only and should not be viewed as a substitute for professional advice. Always consult with a tax or legal expert before making changes to your tax strategy. The suggestions provided are general in nature, and tax laws are subject to change, so there's no guarantee that they will remain consistent over time.
Investments
If you haven’t already, consider maximizing contributions to your retirement accounts and review any employer-sponsored retirement accounts. If you qualify for catch-up contributions, this is also an ideal time to make that adjustment.
Retirement Strategy
As with investments, it’s wise to review your retirement accounts and ensure you are contributing the maximum allowed. Catch-up contributions are another opportunity to bolster your savings, so consider whether you’re eligible.
Taxes
It's a good idea to touch base with your tax or legal advisor before the year ends, particularly if you have questions about any expenses or deductions for the year. You should also assess the sales of property, along with both realized and unrealized gains or losses. Review any carryforward losses from the previous year, and if you've sold securities, make sure you have cost-basis details on hand. As always, bringing this information to your financial professional is wise.
Rebalancing Your Portfolio
It is recommended to review your portfolio annually, and the end of the year is an ideal time to do so. Changes in the performance of various assets can shift your portfolio's intended asset allocation and risk profile. Rebalancing brings the portfolio back to its original allocation, either by adding new funds or selling “winners” to purchase underperforming assets. This strategy encourages you to buy low and sell high, helping you maintain a balanced portfolio and avoid overexposure to any one asset.
Required Minimum Distributions (RMDs)
If you are over 73 or older, you are required to take the Required Minimum Distribution (RMDs) from your IRA(s). The penalty for missing an RMD is 25% of the required amount. If you haven’t begun taking them yet, reach out to your advisor or get connected with one of our advisors today.
Charitable Gifting
Consider planning any charitable donations or contributions to education accounts and think about giving cash gifts to family members. The annual federal gift tax exclusion for 2024 allows you to give up to $18,000 per person without impacting your lifetime estate tax exemption. Additionally, the end of the year is an excellent time to review any trusts you may have. Creating or funding trusts involves complex tax regulations, so it's a good idea to consult a professional well-versed in trust law before proceeding.1
Check out more information on charitable giving:
Charitable giving blog post
Life Insurance
Year-end is a great time to review your life insurance policies and beneficiaries. Ensure that your coverage aligns with your current needs and take note of any changes to premium costs. Be mindful of factors like your age, health, and the type and amount of coverage, as these can affect both the cost and availability of life insurance. Keep in mind that life insurance policies include costs like mortality and other charges, and prematurely surrendering a policy could incur surrender charges with potential tax implications. Before making any changes, make sure you are insurable, and remember that any guarantees made by the insurance policy depend on the financial stability of the issuing company.
Life Events
Take time to evaluate any major life changes from the past year, including:
- Changes in marital status
- Relocation/Moving
- Job changes
- Purchasing a home
- Starting a business
- Receiving an inheritance or gifts
- Expanding your family
These events can significantly impact your financial strategy, influencing everything from investments and retirement plans to estate planning and insurance needs. While you may have already discussed some of these matters with your financial advisor, it's important to review them again during your year-end meeting. In order to help you prepare, fill out this form to see which areas you need to focus on going into the new year.
1. IRS.gov