This time of year often means excessive shopping and hectic holiday plans, but it also means you have an opportunity for some financial housekeeping before 2019. Whether you’re a financial professional or not, the following tips can help you finish 2018 strong.
Contribute as much as possible to your 401(k)
If your company offers a matching 401(k) contribution plan, it’s already a good idea to contribute at least what they’re willing to match. However, the end of the year is a great time to see what you can do to reach the 2018 contribution limit of $18,000. Finding end of year funds, such as a holiday bonus, to put toward your 401(k) can help minimize your tax liability while bolstering your retirement savings.
Sell positions where you have a loss to reduce taxable income
If you have a diversified portfolio with investments that have incurred losses over the year, you can sell a losing position to offset realized gains. This can reduce your tax burden for 2018. However, there are several rules to consider so it’s important you speak with your financial advisor or tax professional when making this decision.
Remember Required Minimum Distributions (RMDs)
If you turned 70 ½ this past year, the IRS requires that you make a minimum distribution from your retirement account. The distribution amount will vary, but if you don’t make the withdrawal before December 31st, then you’ll incur a penalty.
Check on your flexible spending balance
It’s possible you may have a Flexible Spending Account (FSA) through your employer for medical expenses not covered by insurance. Generally, unused FSA funds are forfeited at the end of the year, so you should make as many last minute medical purchases as possible. This could be new glasses, an end of year check-up, or any other medical expense that qualifies through your benefits office.
Conduct a year-end review
While it’s important to evaluate your financial situation regularly, the end of the year is a great time to sit down to conduct an annual review. If you had a budget with goals outlined for 2018, you can figure out what worked and what didn’t so you’re better equipped to tackle 2019 with confidence. Also, after going through the tips listed above, you should have a better idea of what you can do throughout next year to help keep your finances strong.
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http://time.com/money/collection-post/4159093/last-minute-financial-planning-checklist/
https://www.thebalance.com/year-end-financial-checklist-1289739
Neither NEXT Financial Group, Inc. nor its Representatives give tax or legal advice.
