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Ten Financial Actions to Take Before the Ball Drops

| October 10, 2017
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When you watched the New Year’s Eve countdown and raised your glass to 2017, did you make any resolutions to put your finances first this year? Finance-related resolutions are the third most popular New Year’s resolution, following self-improvement and weight loss. (1) Millions of people strive to get out of debt, save more, or accomplish a financial milestone, whether that’s purchasing a vacation home or retiring. If you fall into this camp, how did you do? Did your resolution fall to the wayside, as many do?

The good news is that it’s not too late to make some headway on your 2017 goals, but you need to start now. It won’t be long until stores are rolling out their Christmas displays, so get a jump start on these ten financial actions before you ring in 2018.

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. 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. If you haven’t used up the full amount and anticipate any treatments, make an appointment before December 31st.

3. Verify Expiring Sick and Vacation Time

Depending on your company, your sick or vacation time might expire at the end of the year. Check with your HR department to learn about any expiration dates. If your sick or vacation time does expire, fit in a last-minute vacation, a staycation, or trips to the doctor to use up these benefits.

4. Use Your Flexible Spending Account

Like your health insurance benefits, you’ll want to use up your FSA (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. 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.

6. Stay on Top of 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.

7. Review Your Insurance Coverages

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 the ideal 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.  

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. Make Sure Your Estate Plan Is Up-To-Date

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.

10. Give Without 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.

Do you need to take any of these steps before the ball drops on New Year’s Eve? We’d love to help you finish the year off strong and set you up for a successful 2018. Contact us today at 616-396-0500 or email jjohnson@delongbrower.com if you want the help of a trusted professional as you follow through on your resolutions.

About Joel

Joel Johnson, AIF® is an Investment Advisor Representative with DeLong & Brower, P. C., a Holland, Michigan accounting, retirement consulting, insurance, and financial services firm. He specializes in providing comprehensive wealth management and retirement plan consulting for individuals, families, retirees, and business owners. Along with more than 15 years of industry experience, Joel is an Accredited Investment Fiduciary® and a Chartered Federal Employee Benefit Consultant. To learn more, visit www.cpaholland.com.

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(1) http://www.statisticbrain.com/new-years-resolution-statistics/

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