Now that summer is ending it is a good time to look at your finances for year-end planning.
Retirement Accounts:
- Make your target contributions into retirement accounts.
- Determine if it is beneficial to convert IRAs into Roth IRAs.
- For people older than 70 ½, make IRA and 401(k) mandatory minimum distributions to avoid penalties.
Investments:
- Determine when lower long-term capital gain taxes apply to your investments.
- Tax-loss harvesting: matching capital gains and losses to see if it is beneficial to sell something before year-end.
- Rebalancing the asset mix of your portfolio.
Crystal Ball Analysis:
Is it likely that taxes will increase or decrease next year on income or transactions you expect to make next year? If this year’s tax rates are more favorable for something, then minimize your tax liability by accelerating items before year-end, otherwise delay those transactions until after year-end.
Other Items:
- Adjust your payroll tax withholding if it appears that it is too much or too little to avoid penalties or large refunds.
- Maximize insurance benefits, for example, if your health insurance deductible will be met then plan any appointments or procedures before year-end when they reset.
- Deplete flexible health spending accounts before they are lost at year-end.
- Make charitable gifts and any cash donations for the current year.
None of these items will automatically occur on their own for your benefit so make sure you complete what is needed to keep your finances on track.