Broker Check
Tie Up Your Year-End Financial Loose Ends

Tie Up Your Year-End Financial Loose Ends

| November 12, 2021

2021 is almost over and now is a great time to give your finances a careful once-over in order to maximize your tax savings and make sure you're still on track to reach your goals.

Taking this time before the end of the year to make important financial moves can save you money in taxes, help boost your retirement contributions, and make sure your assets are sufficiently protected heading into a new year.

Consider checking some of these money moves off your list before December 31st:


Maximize Retirement Contributions

If you have a group retirement plan from your employer, make sure to contribute to it each year. Plus, many employers offer a generous match based on your contributions.

  • You can contribute $19,500 in your 401(k) or other employer-sponsored retirement plans, plus an extra $6,000 in catch-up contributions if you’re 50+
  • If you don't have a workplace plan, you contribute up to $6,000 ($7,000 if you’re 50+) in a traditional IRA
  • If you freelance or are self-employed, you can contribute up to $57,000 or 25% of your qualifying income, whichever is less


Take Your Annual RMD

If you don’t withdraw enough to meet the Required Minimum Distribution, you will get penalized 50% of the amount you were supposed to withdraw but didn’t. This is a heavy penalty to pay for missing the deadline.


Consider Converting to a Roth IRA

One way to lower your tax bracket, and boost your tax-free assets, is to move some money from traditional accounts like a workplace plan or a traditional IRA to a Roth IRA. However, it’s important to keep in mind that doing this may trigger income taxes.


Lower Your Tax Bracket

There are a few strategies to follow now, that may benefit you for the tax season and the new year. You may be able to get a deduction and decrease your tax bill by making your January mortgage payment before the end of the year. If you plan on making charitable donations this year, consider putting them on your credit card so you can get the tax deductions this year, even though you won’t pay it off until next year. Another strategy to help reduce your tax burden is to offset capital gains with capital losses. Also known as tax-loss harvesting, selling stocks and funds that have lost value can offset taxes on profits from sales of those that have gained value.


Evaluate Your Insurance Coverage

Did anything big happen this year? Get married? Had a baby? Bought a house? Started a business? If so, your current insurance coverage may not be enough to cover your needs in the new year. 


Review Your Finances

Year-end is the perfect time to review your budget. Assess your spending habits and check savings accounts to see if you need to make any adjustments. If you're not on the right track to achieve your goals, you may want to look for ways to reduce your expenses.


Planning Your Legacy

If you are planning to give cash to children or grandchildren this year, remember the annual gift-tax exclusion amount is $15,000; you can give that much to as many individuals as you like. You can also give beyond that limit with a state-based 529 plan. Each parent and grandparent can give up to $15,000 per year, tax free, to help fund a child’s college or some K-12 expenses.


If you are worried that you’re not on the right track, call our office and set up a time to talk. Our financial advisors can guide you through tying up some loose financial ends before the end of this year and setting up a solid financial plan for next year.

CONTACT US to speak with an experienced financial advisor today. We can help you plan for the future you want.