As the year winds down, it’s the perfect moment to pause, take a breath, and check in on your financial well-being. A little attention now can set you up for a smoother, more confident start to the new year. Think of this as a quick tune-up to ensure your financial plan is still aligned with your goals.
Handle Your Required Minimum Distributions
For our clients who are required to take distributions from their retirement accounts, this is a top priority. You must take your full Required Minimum Distribution amount before the December 31 deadline to avoid significant penalties. If you’re working with us, rest assured we’ve already taken care of this for you.
Maximize Your Retirement Savings
If you are still working, verify you are on track to max out your retirement plan contributions. You might have room to contribute more to your 401(k) or IRA before the year ends. Investors over age 50 can also make catch-up contributions to boost savings and potentially lower taxable income (up to $7,500). With the passing of the SECURE 2.0 Act, investors between the ages of 60 and 63 can make “super” catch-up contributions of up to $11,250 (150% of normal catch up). You can also be sure to fund IRAs, Roth IRAs, or HSAs, if eligible (these can be funded up until April 15, 2026).
Review Your Tax Picture
Year-end is an ideal time to consider tax planning. We can look for opportunities in your taxable investment accounts to help manage your tax bill. This might involve selling certain investments to help offset taxes you may owe on investment gains. Taking a proactive look at your taxes now can prevent surprises in April. With the recent stretch of double-digit annual returns in equities over the past 3 years, this may be harder than ever to do, but worth taking a look at.
Plan Your Charitable Giving
If you are charitably inclined, there are tax-smart ways to give before the year is over. For clients age 70½ and older, a Qualified Charitable Distribution is a powerful tool. This allows you to send money directly from your IRA to a charity. The donation can satisfy all or part of your RMD and is not included in your taxable income.
Update Your Estate Plan and Insurance
Life changes often require updates to your estate documents. Please review your will, trust, and power of attorney to ensure they match your current wishes. It is also smart to review your home and auto insurance policies to confirm your coverage is adequate.
Check Your Beneficiaries
Major life events are important prompts to review your account beneficiaries. Take a moment to check the beneficiaries listed on your IRAs, 401(k)s, and life insurance policies. Keeping these up to date ensures your assets will be distributed according to your intentions. Completing this short checklist can help you enter the new year with financial clarity.
Disclosures
This material has been prepared for informational purposes only and should not be construed as a solicitation to effect, or attempt to effect, either transactions in securities or the rendering of personalized investment advice. This material is not intended to provide, and should not be relied on for tax, legal, investment, accounting, or other financial advice. You should consult your own tax, legal, financial, and accounting advisors before engaging in any transaction. Asset allocation and diversification do not guarantee a profit or protect against a loss. All references to potential future developments or outcomes are strictly the views and opinions of Richard W. Paul & Associates and in no way promise, guarantee, or seek to predict with any certainty what may or may not occur in various economies and investment markets. Past performance is not necessarily indicative of future performance.