Year-end financial planning tips
Personal Financier: Year-end financial planning tips
With the holidays just around the corner, it’s easy to let financial plans veer off course or become derailed entirely. Here are a few suggestions on how to finish the year without regret:
Meet with your financial team
Those who are self-employed or have complicated tax situations should meet with their CPA or tax preparer to review their current year tax projection. There may be time-sensitive strategies to implement before year-end. It may also be prudent to meet with your financial adviser to set goals for the following year based on how 2015 has shaped out.
If you have a Flexible Spending Account with a balance, make sure to use it by year-end for qualifying purchases. Unlike Health Savings Accounts, which rollover, these funds are use it or lose it. If a balance is left unspent at year-end, you have basically given back those savings (and maybe far more).
Max out retirement accounts
For those contributing to a 401(k) or similar employer-sponsored plan, your annual deferral limit is $18,000 by the end of the calendar year. An additional “catch-up” $6,000 can be made to these plans if over the age of 50. For those with IRAs, you can contribute up to a maximum of $5,500 ($6,500 if over age 50). This can be funded as late as April 15, 2016.
Make a holiday spending budget
Before heading out the door to complete your holiday gift list, make sure to create a budget. First decide what you can afford to spend in total and then assign a maximum dollar value to each gift. Focusing on staying on budget for each gift will ensure a feeling of guilt-free giving when the total budget is kept in check.
Take required minimum distributions (RMDs)
If you are age 70 ½ or older, you must take required minimum distributions from your traditional IRA and other qualified plans (including SEP, SIMPLE & defined contribution plans). These distributions must be taken by Dec. 31, 2015. However, those who turned 70 ½ in 2015 have until April 1, 2016.