Your annual financial planning checklist

10 year-end personal financial review items.

Article published: June 12, 2024

The end of the year is traditionally a busy time, filled with holiday planning, travel, and spending time with family and friends. But it also means that key deadlines to take advantage of any money-earning and tax-saving opportunities are fast approaching. This may leave you wondering, “What should I do financially before year end?” To help make sure you don’t miss out, we’ve created this year-end financial checklist so you can wrap up the year with confidence.

Use any remaining flexible spending account balances

Make sure you use up any remaining funds in your Health Savings Accounts, Flexible Spending Accounts for childcare and dependent care, and transportation accounts. Typically, the expenses you’re being reimbursed for must have occurred in 2022.

Some plans offer greater flexibility. Check to see whether your plan allows you to file for reimbursement of 2022 expenses after the start of the new year (funds typically give you 90 days to file). Plans may also allow you to roll funds over for use in 2023 or allow you to use 2022 dollars to pay for expenses that you incur in 2023.

Maximize retirement plan contributions at work

Make sure you put as much as you can into your employer-sponsored retirement plan, such as a 401(k) plan. You can contribute up to $20,500, or $27,000 if you are 50 or older. This amount is separate from any employer-matched contributions.

Make charitable contributions

This is a key item on your year-end financial checklist because of the strict deadlines. Donations must be dated before Dec. 31. Stock donations to charities must be completed by then, too. Donating stock not only can provide you with a tax reduction, but also let you avoid capital gains tax on the appreciated asset.

And don’t worry, it doesn’t fall on the charity either because they are tax-exempt. Tangible gifts must also be received by the charity by Dec. 31 – make sure to keep a detailed list of what was donated for any gifts of this type.

As you do your annual financial review, if you think you might be in a lower tax bracket next year, you may want to consider accelerating your charitable contributions to this year to get more money from deductions.

Reimburse yourself for expenses from your 529 plan

The expenses for which you’re being reimbursed this year must have occurred in 2022.

While contributions to 529 plans are not tax deductible, you can use up to $10,000 per year for qualified expenses. Not all states are compliant with federal rules, so be sure to check with your tax professional first.

Review your annuity exit strategy

If you die with annuities in your estate, your beneficiaries will be taxed at their ordinary income rates. A better option is to take distributions post retirement, when your tax rate may be lower. So if you’re retired – or planning to retire in the near future – it’s a good time to review your annuity exit strategy. If you are charitably inclined, another option to consider is changing the beneficiary of the annuity to a charitable organization – as it will not have to pay tax on the distribution.

Please note that if your non-qualified annuity has gone down in value from what you paid for it, you may want to keep it and pass it along at death because of the potential increased death benefit.

If you are an entrepreneur, set up a solo 401k plan

This account is also known as a Self-Employed 401k or an Individual 401k. This can help you save a great deal on taxes and maximize your retirement savings. You must set these accounts up by Dec. 31.

Carry out transactions that can lower your 2022 taxes

Review your portfolio and consider selling stocks or funds that have decreased in value at a loss. If you sell a stock or a fund at a loss, you can write off those losses on your taxes against any gains. This may likely already be part of your own year-end financial checklist for when you meet with your financial advisor. He or she should be able to provide recommendations that could benefit your long-term investment strategy.

Also, check on medical expenses and other tax deductions. You can only deduct certain expenses after they exceed a certain percentage of your Adjusted Gross Income – for example, medical expenses must exceed 7.5% of your AGI – so you may want to accelerate those payments into this year or schedule them for next year.

Consider making financial gifts to your children or grandchildren

You can give up to $16,000 to any one person each year without paying a federal gift tax. For example, you could give $16,000 to your daughter and $16,000 to her husband, and your spouse could do the same, for a total of $64,000 ($16,000 x 4).

If you go above that limit, say $50,000 to help a child with a down payment on a home, you most likely won’t have to pay more taxes, but you will have to file an additional form with the IRS: the Gift Tax Form 709. For couples filing a joint return, the gift tax form threshold is $32,000 for an individual when the money is coming from separate accounts from the husband and wife.

Consider whether you should withdraw funds from your ira

If you are older than 72 or have an inherited IRA, you must take money out as a Required Minimum Distribution based on age and marital status. If you don’t take out enough, the IRS will fine you 50% of the amount you were supposed to withdraw but didn’t. That is in addition to the taxes you already owe on the distribution. So if you didn’t take out $10,000 that you were supposed to on the RMD, the IRS can take away $5,000.

If you are older than 59½ and in a bracket that is lower than normal this year, consider taking money out of your account this year. Just make sure you don’t take out an amount that would bump you into a higher tax bracket.

Seek the advice of a financial planner

Talk with an advisor about your wealth management goals for the next year and beyond. A financial planner can work with you to create or update your personal financial plan to help you achieve financial freedom.

If you aren’t already working with a financial advisor, consider setting up a no-cost, no-obligation meeting to discuss your financial goals with one of our financial planners. We can work with you to create a long-term strategy to help you secure the retirement you deserve.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to include your qualified tax and/or legal professionals in these discussions and decisions to help determine the best options for your particular circumstances.

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