Financial Questions to Ask Before the End of the Year

As the year comes to a close, it’s important to make sure you’ve taken care of the following items on your to-do list to optimize any tax benefits or deadlines for the year. A little year-end planning can go a long way in helping you save for the future.

  1. Can I contribute more to my retirement account this year?

    Who should consider this? Anyone with a retirement account who hasn’t contributed the maximum limit allowed by the IRS.

    The annual maximum IRA contribution is $5,500 per year in 2018 (the limit will increase to $6,000 a year in 2019). If you have some extra savings and haven’t contributed the maximum amount to your IRA, consider a year-end contribution to take advantage of the tax benefits.

  2. Should I roll my retirement money from a traditional to a Roth IRA?

    Who should consider this? Anyone with a traditional IRA, particularly if you are younger or if your income, and therefore tax bracket, is lower this year than you think it will be in the future.

    The IRS allows you to transfer money from your traditional IRA to a Roth IRA using a process called a rollover. This can have many long-term advantages, particularly if you are younger or find yourself in a lower tax bracket this year. However, the change needs to happen by the end of the year, and you will be taxed on the amount you roll over as ordinary income on your taxes, so this is a good topic to bring up with your advisor.

  3. Do I want to make any year-end charitable, HSA, traditional retirement, or other contributions that will lower my taxable income?

    Who should consider this? Anyone who wants to get a tax deduction and who planned to make a contribution this year.

    If you’re looking for a way to lower your taxable income, consider a contribution to a tax-advantaged account. Talk with your advisor or accountant to see how the new tax laws might impact your year-end tax planning.

  4. Should I implement any tax strategies in my investment accounts?

    Who should consider this? People with after-tax investment accounts.

    Talk with your advisor about year-end tax planning strategies such as whether or not you should recognize any gains or losses in your after-tax accounts.

Have questions? Be sure to talk with an advisor or accountant before the end of the year to make sure you are taking advantage of all the opportunities available to you.

Stephanie Vail

About the Author

Stephanie Vail is a member of the Custer Financial Advisors team. She specializes in helping millennials with financial literacy and planning. To learn more about Stephanie and Custer Financial Advisors, visit www.CusterFinancialAdvisors.Com or email Stephanie at SVail@lpl.com.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.