With 2024 coming to an end, now is the perfect time to take stock of your financial situation and make any necessary adjustments. To help you wrap up the year on a strong financial note, here’s a checklist of important actions to consider:
Maximize retirement contributions. Ensure you’re taking full advantage of retirement account contributions. For 401(k)s, the 2024 limit is $23,000, with a $7,500 catch-up if you're 50 or older. Starting in 2025, those aged 60 to 63 can contribute even more with a special catch-up of $10,000 or 150% of the standard limit. For IRAs, you can contribute up to $7,000, with an extra $1,000 catch-up if you're 50 or older, helping to reduce your taxable income.
Review and rebalance investment portfolio. Year-end is a great time to reassess your investment portfolio, adjusting asset allocations to ensure alignment with your financial goals. We’d be happy to schedule time in the new year to discuss your portfolio, risk tolerance, and any relevant life changes.
Create a financial inventory. Compile a detailed list of your assets, debts, and other financial information. This inventory will provide a snapshot of your financial health and make it easier to manage and tack your finances moving forward.
Plan for required minimum distributions (RMDs). For those who turned 73 this year, remember that your first RMD must be taken by April 1, 2025 and your second by December 31, 2025. After that, you must take your RMD by December 31 each year. There is one exception to this. If you're still working and have a workplace retirement plan (like a 401(k) or profit-sharing plan), you may be able to delay your RMDs until the year you retire — unless you own 5% of the business sponsoring the plan or the plan provides otherwise. Planning ahead can help avoid penalties and ensure you’re compliant with IRS regulations.
Prepare for tax season. Start gathering and organizing your financial documents now to ease the tax filing process next year. Review any potential tax changes for 2025 that might affect your planning.
Consider tax-saving strategies. Explore opportunities to reduce your tax liability. Charitable contributions, such as donations to qualified charities or donor-advised funds, can be tax-deductible. If you're 70½ or older, you can transfer up to $100,000 per year to charity tax-free. For those who are 73 or older, a QCD can also satisfy your required minimum distribution (RMD) for the year, while reducing your taxable income.
Review your insurance coverage. Make sure your insurance policies are up-to-date and adequately cover your current needs. Life events like marriage, the birth of a child, or purchasing a home might require adjustments to your coverage.
Check your estate plan. Review your estate planning documents, including wills, trusts, and beneficiary designations. With potential changes to estate tax laws on the horizon, now might be a good time to consult with an estate planning professional.
Contribute to or withdraw from 529 plans. If you’re saving for education, consider making additional contributions to your 529 plan before year-end. Additionally, if you’re planning to take a qualified withdrawal, doing so before December 31 can align with your cash flow and tax planning.
Remember, financial health is a continuous process that requires regular monitoring and adjustments. Please reach out if you need help with any items on this checklist or have questions about closing out 2024 on strong financial footing.
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