Tips to Maximize Your Year End Financial Planning Strategies

November 4, 2020

The end of the year is quickly approaching and reviewing your financial plan is important in meeting your goals. Financial planning is determining your goals, putting together a path on how to get there, monitoring your progress, and making adjustments for unexpected events. It is a good idea to review your financial plan often but here are some tips to consider before the end of the year.

Maximize your eligible traditional and Roth IRA contributions. The contribution limits in 2020 are $6,000 (plus an additional $1,000 if you are over 50). There are some income limits and other restrictions.

Maximize your 401(k), 403(b), or 457 employer retirement plan. The contribution limit for employees are $19,500 (plus an additional $6,500 if you are over 50).

Year-end tax loss harvesting. If you have realized capital gains this year you will have to pay capital gains tax on those gains. However, if you have offsetting losses in your portfolio that can be sold by the end of the year, you can “realize” the losses and help minimize your gains.

Update your beneficiaries. Reviewing your beneficiaries is important as there are many life events such as divorce, marriage, or death that may require a beneficiary change.

Review your estate planning documents and update them if necessary. Make sure your wishes are met by detailing them in your Will, Trusts, and Living Will. Also make sure your Power of Attorneys (POA) are updated as they can go stale.

Make your charitable donations. Making charitable donations does not only make you feel good, but it also provides you with some tax benefits. Make sure you make your donations before the end of the year.

Review your investments. You should be reviewing your portfolio on a consistent basis and updating the valuations and comparing the numbers to your financial plan is important.

Meet with your tax advisor before the end of the year. You should contact your tax advisor before the end of the year to make sure you are minimizing your taxes.

If you have any questions about creating a financial plan or reviewing your plan, you can contact us and we will be more than happy to help.

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