Can you believe the year is wrapping up, and 2024 is right around the corner! Now is a good time to review your finances: doing so now will give you enough time to make adjustments to your finances that can help you end the year strong and start the New Year off right.
Here are a few things to consider before the end of the year.
1) Contribute to your retirement account(s).
Have you maxed out your 2023 IRA or Roth contribution? For Traditional and Roth IRAs, you can contribute up to $6,500 for 2023, up from $6,000 in 2022. Retirement savers age 50 and over can chip in an extra $1,000 a year as a catch-up contribution, for $7,500 in all.
2) Review your estate plan.
Were there any significant changes in your life in 2023? If so, be sure that your Will and/or Trust are updated to include these changes. This is particularly important if there has been a change in your family or marital status, a change in state or federal tax laws, or if you have a desire to make a gift.
Additionally, remember that the listed beneficiaries of a financial account – such as a 401(k), IRA, or Insurance policy – will take precedence over your will; make sure those lists of beneficiaries reflect how you wish to distribute your assets.
If you don’t have a Will, make it a goal to establish one before the end of the year!
3) Look at your charitable giving.
There’s never a bad time to give to your favorite charities. Covenant ministries and other charities will be blessed by whatever you can give, whenever you can give it. However, if you would like to receive tax benefits for 2023, you’ll have to make your donation before the end of the year.
If you’ve had a large capital gains tax event (like selling your home), consider opening a Donor-Advised Fund or Charitable Gift Annuity to offset the large gains. We’d be happy to discuss some of those options with you.
4) Have you taken your Required Minimum Distribution?
For those 73 years or older, be sure that you take any Required Minimum Distribution (RMD) before December 31st. There is a hefty fine for not taking your RMD, so make this withdrawal when you are legally obligated to do so.
5) Review your designated beneficiaries for retirement accounts, annuities, and life insurance policies.
Many people forget to update their beneficiaries after a significant life event like a marriage, divorce, or death of a spouse. It’s also important to update your beneficiaries when the beneficiary’s name may have changed (i.e., marriage or divorce). Make it an annual task to ask yourself these questions with regard to your policies that have beneficiaries listed so you can ensure your wishes are carried out when you pass away.
6) Review your budget.
The end of the year is a great time to review your budget and determine if any adjustments need to be made. Consider things like income changes, bonuses received, new expenses in the coming year or current expenses that may be going away.
7) Start preparing for your tax return.
A best practice for accurate tax returns is to gather receipts and backup documents in a tax folder throughout the year. If you haven’t done that, the year-end is a good time to get caught up. In addition, add year-end financial statements to your tax folder, as they frequently provide tax preparers with helpful information. As employer-provided W2 or investment 1099’s come in, drop them in your annual tax folder.
8) Evaluate your insurance coverage.
The end of the year is a good time to re-evaluate the insurance coverage you require. Many annual premiums come due in January, so if you plan to make changes, December is the time to initiate discussions with your insurance broker.
We can help!
Perhaps there is no greater gift that people can give than their own time, and we are grateful that we get to share that gift with our clients every day. Whether we are answering simple questions about their accounts, discussing their plans to take care of their families, or helping them give to their favorite ministries or charities, we consider it an honor to serve our clients and dedicate our time to providing them with peace of mind and helping them effectively utilize their assets to make an impact during and after their lifetime.
As the end of the year draws near and 2024 approaches, now is a great time to review your financial and estate plans for you and your family. If you would like to speak to someone about your plans, please call your local Financial Services Representative. We’d love to share this gift of time with you.