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End of Year Tips


Hey, did you know the end of the year is approaching?  I’m sure you had no clue.  Oh, my wife mentioned recently – “There are 58 days left until Christmas.”  I was shocked as she has never done that.  I asked her how she knew it and she said a student gives the countdown.  I recommended instantly failing the student, however, she felt otherwise.  Regardless, you will start seeing lots of “end of the year tips” articles.  Okay, maybe only financial nerds like me will see them.  Well, here is your first one.  It is a mash-up from one by Ed Slott, who is the self-described “America’s IRA Expert,” and some thoughts of my own.  This isn’t an exhaustive list, but it will get you started.

  • Be sure you have taken your RMD for the year.  Remember, RMD stands for Required Minimum Distribution.This starts when you hit 70 ½ and goes until you pass away (actually, it could go longer with inherited IRAs, but that is for another conversation).  RMDs are not terribly difficult to calculate if you want to do it yourself.  However, be sure to take it otherwise the penalty is 50%!
  • Just in case you inherited an IRA, you may have RMDs to deal with here as well. 
  • If someone who was RMD eligible passed away during the year and did not take out all their RMDs, you need to complete this by paying them out to the beneficiaries.  Again, 50% penalty if not done.
  • If you haven’t maxed out your 401k/403b/457 this year and can afford to, reach out to your benefits department to see if you can contribute more the last few paychecks of the year so it is maxed out.
  • Speaking of maxing out retirement plans, be sure to increase your plan contribution rates for next year when the retirement plan savings rates bump up. 
  • Charitable IRA Contributions also need to be made by the end of the year.  This is where you can take your RMD (up to $100,000) and direct it to a charity of your choice.  If fulfills your RMD requirement and is not taxed to you.  Just make sure it goes directly to the charity.  You do NOT want it to come to you first and then you give it to the charity.
  • Empty out your Flexible Spending Account (FSA), unless your employer allows some of the unused funds to be rolled over.  Please don’t confuse this with a Health Savings Account (HSA) as the FSA is geared more toward immediate health-related expenses and include a use-it or lose-it feature for the calendar year.
  • Odds are you are in the midst of completing benefit documents for the upcoming year.  Be sure to also check the beneficiary information on your plans.  You’d be amazed some of the conversations I have had over the years about beneficiary information that hadn’t been changed in decades.  Oh, and this includes contingent beneficiaries too.
  • Connected to the previous point, check the information on your statements too.  You know, like the home address (I just discovered one of my documents has the wrong street extension). 
  • If you have a CPA do your taxes, give them a call to make sure there aren’t any end-of-the-year tax moves they may recommend.  Every CPA is sitting around with nothing to do right now since the extension deadline is over (I am kidding).  However, this is now a better time to call them instead of a month ago.
  • The same rule applies if you know you need to update some or all of your legal documents.  Although I expect the estate planning attorneys to tell you they are always busy😉

So, just in case the normal stressors of the year-end aren’t enough I figured I would throw a few more items your way.  Although I have a lot of my usual sarcasm in here, these items are rather important to at least start looking at.  It is also worth sharing this article with others.  And if your advisor isn’t talking to you about some of these items, definitely give me a call.