Your 2024 Year-end Planning Checklist!
2025 is upon us! Ensure that you are ready to close out 2024 on strong financial footing with our year-end checklist.
Year-end Checklist:
1) Tax Planning
Maximize 2024 Tax-Advantaged Contributions: Consider increasing your contributions to the maximum allowable amounts to accounts like 401(k)s, IRAs, HSAs, or 529 plans. For 2024, confirm the IRS contribution limits for these accounts.
Harvest Tax Losses: Offset taxable gains by selling underperforming investments. Be mindful of the IRS wash-sale rule.
Defer or Accelerate Income/Expenses: Based on your tax bracket, consider deferring income or accelerating deductible expenses to optimize your tax liability. Work with your tax professional.
Utilize Appropriate Tax Credits and Deductions: Confirm eligibility for tax credits like the Child Tax Credit, American Opportunity Credit, or energy-efficient home improvements. Work with your tax professional.
Are You Charitably Inclined?: Make any planned charitable contributions to eligible organizations before December 31. Consider utilizing a Donor-Advised Fund and gifting appreciated stock to maximize tax efficiency.
2) Retirement Planning
Evaluate Retirement Readiness: Reassess your retirement goals, expected income streams, and projected retirement living expenses to ensure you're on track to live the life you want.
Review Retirement Account Contributions: Ensure you've maximized contributions to retirement accounts. Don't forget to include catch-up contributions if you're age 50 or older.
Conduct a Roth Conversion Analysis: Evaluate whether converting traditional IRA funds to a Roth IRA makes sense for your tax situation.
Take Required Minimum Distributions (RMDs): If you're age 73 or older or you have an inherited retirement account, confirm you've taken your RMDs by the deadline to avoid penalties.
3) Investment Portfolio
Rebalance Your Portfolio: Review your asset allocation to ensure it aligns with your risk tolerance and investment goals. Rebalance your portfolio to your target portfolio, if appropriate. Taxable accounts may incur taxable gains, be mindful.
Harvest Tax Losses: Offset taxable gains by selling underperforming investments. Be mindful of the IRS wash-sale rule.
Diversify Investments and Review Portfolio Concentrations: Ensure your portfolio is well-diversified across asset classes and sectors to minimize risk. If you have concentrated positions, consider committing to a plan to begin to lessen your concentration and risk.
Ensure Investments Are Aligned with Goals and Purpose of Funds: Align your investments with short- and long-term goals, such as home purchases, education savings, or retirement. Shorter-term goals should be invested more conservatively while longer term goals such as retirement, may be invested more liberally.
4) Estate Planning and Insurance
Review Your Will and/or Trust: Ensure your will and any trusts reflect your current wishes and family circumstances.
Check Beneficiary Designations: Verify that the beneficiaries for retirement accounts, life insurance policies, and other accounts are accurate and up-to-date. These types of accounts pass directly to beneficiaries, your will has no bearing on these.
Evaluate Your Potential Future Estate: Estates that are large enough must pay estate tax at federal and state levels which can reduce the benefit that your heirs receive. Strategies like gifting, charitable contributions, and trusts can help reduce your taxable estate.
Consider Gifting Strategies: To reduce your taxable estate, explore annual gifting up to the exclusion limit or setting up a trust.
Review Insurance Coverage: Confirm that your health, home/auto, life, disability, and long-term care insurance policies meet your current needs.
Note: This is not an exhaustive list of all year-end planning items. Also, this list is intended for educational purposes only and does not convey financial, investment, tax or legal advice. Contact professionals where appropriate to help you make informed decisions about your situation.
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