10 Important Financial Questions to Ask Yourself Before Year-End

As 2024 draws to a close, it’s a good time to reflect on your financial situation and set yourself up for success in the coming year. Whether you’re managing personal finances, planning for retirement, or strategizing as a business owner, this checklist covers essential questions to help you navigate year-end financial planning. From tax strategies to retirement contributions, these topics can help you make informed decisions for a strong financial future.

1. Have I Contributed to My Retirement Plans?

Take advantage of any employer-matching contributions to your retirement plan and, if possible, aim to contribute up to the maximum limit. Beyond employer plans, consider whether making a contribution to a traditional IRA or Roth IRA is right for you. Keep in mind that traditional IRA contributions may not be fully deductible, so talk with your Wealth Advisor or CPA to determine the best approach for your unique tax situation.

2. Am I Aware of Required Minimum Distributions (RMDs)?

Once you reach the age for Required Minimum Distributions (currently 73), it’s essential to start taking RMDs from traditional IRAs and employer-sponsored retirement plans by year-end. Starting in 2033, this age requirement will increase to 75. It’s important to stay informed about changes, especially if you have inherited IRAs, as the SECURE Act has adjusted the RMD rules. If you’re unsure about timing or amounts, a Wealth Advisor can provide guidance.

3. Do I Know the Rules for Inherited IRA Distributions?

Inherited IRAs come with specific distribution rules, which can vary depending on when and from whom you inherited the account. The IRS recently issued guidance on these rules, which can be complex. Consulting your Wealth Advisor or CPA can help clarify your options and ensure that your distributions align with both your financial goals and IRS requirements.

4. Are There Charitable Gifts I’d Like to Make Before Year-End?

If you’re considering charitable donations, year-end is a good time to evaluate your giving options. Cash gifts are straightforward, but other strategies—such as donating appreciated securities, contributing to a Donor-Advised Fund (DAF), or making Qualified Charitable Distributions (QCDs) for IRA owners age 70 ½ and older—may provide additional tax benefits. Consult your advisor for the best approach to maximize your impact.

5. Are There Personal Gifts I’d Like to Make?

In 2024, you can gift up to $18,000 per individual (or $36,000 for married couples) without triggering federal gift tax. This annual exclusion can be a tax-efficient way to support family members or loved ones. Remember, gifts to 529 plans or trusts holding life insurance may count toward your exclusion, so consider your options carefully.

6. Have I Withheld Enough to Avoid Tax Penalties?

Avoid surprises when tax season arrives by reviewing your income tax withholding and estimated payments. The IRS safe harbor rule requires individuals to pay at least 90% of their current-year tax liability or 100% (110% for higher income levels) of the previous year’s liability to avoid penalties. Check with your CPA if you’re unsure about your withholding status.

7. Am I in a Low Tax Bracket?

If you’re in a low tax bracket, this could be an opportunity to take advantage of strategic distributions or gains. For retirees who haven’t yet started RMDs, withdrawing funds from an IRA or realizing portfolio gains now could help you manage future tax brackets. Consult with your Wealth Advisor about potential tax-saving strategies that align with your long-term financial goals.

8. Have I Spent My Flexible Spending Account (FSA) Funds?

If you have a Flexible Spending Account (FSA), remember that any unused funds may not roll over to the next year. Review your remaining balance and consider spending it on qualified expenses before the year ends. For a list of eligible expenses, visit this link.

9. Is My Identity Secure?

While identity security isn’t limited to year-end, it’s especially critical during the holiday season when online shopping and cyber threats increase. Protect your financial accounts by enabling security features like two-factor authentication, verbal passwords, and voice recognition. Reach out to your Client Service Associate to discuss other options for safeguarding your information.

10. Do I Need to Review My Estate Plan?

With potential changes in estate tax laws on the horizon, now is a good time to revisit your estate plan. The sunset of the Tax Cuts & Jobs Act in 2025 may lower gift and estate tax exemptions. Reviewing your estate plan, beneficiary designations, and appointed roles (such as trustees and executors) with your Wealth Advisor or attorney can help ensure everything is up to date.

As you wrap up 2024, taking the time to address these questions can help you feel more secure and prepared. A proactive approach to financial planning can set the stage for a prosperous year ahead. For more personalized guidance, reach out to your Wealth Advisor, who can help you tailor these steps to fit your unique goals.