Ten Financial Actions to Take Before the Ball Drops!

As hard as it is to believe, 2017 is almost over! While December is often a celebratory time of the year as we enjoy the holidays and spend time with our families, it can also be overwhelming and stressful for many of us. As we get ready to say goodbye to 2017, we may realize that we have not accomplished all our goals and we frantically attempt to squeeze in a few last-minute projects before January 1st rolls around.

Since your wallet definitely won’t be gathering dust this season, why would you let your financial plan fall to the wayside? Here are ten critical financial steps to take before we enter the new year.

1. Make The Most Of Your Retirement Savings

If possible, max out your contributions to your 401(k) by the end of the year to make the most of your retirement savings. For 2017, you can contribute as much as $18,000 (or $24,000 if you are 50 or older). You might also consider contributing to a Roth IRA. For 2017, you can contribute as much as $5,500 (or $6,500 if you are 50 or older). Keep in mind that if your income is over $196,000 and you’re married filing jointly, you won’t be eligible to contribute to a Roth IRA.

2. Consider a Roth Conversion

Roth IRAs are attractive because you don’t pay income tax when you withdraw funds in retirement. However, if you’re a high-income earner, you may not be eligible to contribute and instead invest in a Traditional IRA. If you have a Traditional IRA, you may have the opportunity to convert to a Roth IRA and save money on taxes in the long run. The deadline to convert to a Roth IRA is December 31st, so if you’ve been considering doing so, or wonder if it’s an appropriate option for you, talk to your financial advisor ASAP.

3. Use Your Medical and Dental Benefits

Did you have good intentions of taking care of some dental work, blood tests, or other medical procedures? Now’s the time to take advantage of all your healthcare needs before your deductible resets. Dental plans, in particular, often have a maximum coverage amount, and many cover two teeth cleanings per year. If you haven’t used up the full amount and anticipate any treatments (or just need a good teeth cleaning!) make an appointment before December 31st.

4. Use Up Your FSA Dollars

Like your health insurance benefits, you’ll want to use up your Flexible Spending Account dollars by the end of the year. Your benefits won’t carry over and you’ll lose any unspent money in your account. Check the restrictions for your account to see what the money can and cannot be used for.

5. Keep Up On Your Charitable Contributions

If you made a charitable contribution in 2017, you might be able to lower your total tax bill when you file early next year. It can be especially advantageous if you donated appreciated securities to avoid paying taxes on the gains. Along with your other tax documents, find and organize any receipts you have from your donations to charities, whether it was a cash, securities contribution, or another type of gift.

6. Review Your Insurance Policies

A lot can happen in a year. As you experience life changes, from the birth of a child to marriage to a new career, it’s important to regularly review your insurance coverages and your designated beneficiaries. Now is a good time to review your current insurance policies and make sure they are up-to-date. You might also want to evaluate your need for other types of insurance you may not currently have, such as long-term care insurance.

7. Double Check Required RMDs

If you’re retired, review your retirement accounts’ required minimum distributions (RMDs). An RMD is the annual payout savers must take from their retirement accounts, including 401(k)s, SIMPLE IRAs, SEP IRAs, and traditional IRAs, when they turn 70½. If you don’t, you may face the steep penalty of 50% of the distribution you should have taken. To calculate your RMD, use one of the IRS worksheets.

8. Discuss Loss Harvesting With Your Advisor

If you invest in bonds, mutual funds, or stocks in accounts other than your 401(k) or IRA, review your realized and unrealized gains and losses. You might be able to offset some of your gains by selling some losses. Tax-loss harvesting can help you save on taxes, but you want to make sure the move also makes financial sense for your situation. Talk with your advisor about potentially harvesting your losses and if it makes sense for you. Should you determine tax-loss harvesting is appropriate, you’ll need to complete the process by December 31st.

9. Avoid Gift Tax Consequences

It’s never too early to start planning for the legacy you want to leave your loved ones without sharing a good portion of it with Uncle Sam. You may want to consider gifting. Each year, you can gift up to $14,000 to as many people as you wish without those gifts counting against your lifetime exemption of $5 million. If you’ve yet to gift this year or haven’t reached $14,000, consider gifting to your children or grandchildren by December 31st.

10. Update Your Estate Plan

If you have taken the time and energy to create an estate plan, you’ll want to check in periodically to ensure all the documents are up-to-date and no major details have changed. Any major life event is a good time to think about updating your estate plan documents. If you change any of the beneficiaries in one place, such as a life insurance policy, make sure that they are consistent with the other documents so that there is no confusion.

Do you have questions on last-minute financial actions you can take before 2017 ends? Do you want to get on the right financial foot for the new year? I’d love the opportunity to offer you support along your financial journey. If you are interested in getting on the right financial foot, I encourage you to reach out to me for a year-end review. Give me a call at 949-445-1465 or email me at [email protected]

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive level manager, partnering with and serving a diverse range of clients. Specializing in serving high and ultra-high net worth families, Jeff aims to help clients achieve their short-term and long-term goals and to worry less about their finances and more on their passions in life. Based in Orange County, he works with clients throughout Southern California, as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email [email protected].