Year-End Financial Planning Checklist for a Successful New Year

As the year comes to a close, it’s the perfect time to review your financial standing and make necessary adjustments. A year-end financial check-up with your wealth management team ensures that you’re on track to meet your long-term goals and allows you to make strategic moves that can help optimize your finances moving into the new year. Here’s a checklist to guide your year-end financial planning.

Share Major Life Changes

Life events, such as a marriage, divorce, birth or adoption, career changes, or retirement, can significantly affect your financial situation. Inform your wealth management team about these changes, as they may lead to tax adjustments, estate planning updates, or shifts in your financial priorities. Additionally, if you’ve made major purchases or have incurred large expenses—like acquiring a second home, investing in a new business, or undertaking major renovations—be sure to communicate those as well.

Evaluate Investment Performance

The end of the year is a natural point to review your investment portfolio’s performance. Meet with your wealth management team to assess whether your current portfolio still aligns with your financial goals. If there have been changes in market conditions that have caused a deviation from your intended asset allocation, now is the time to make any necessary adjustments to keep your portfolio on track for long-term success.

Maximize Your Retirement Contributions

Review your retirement plan contributions and consider maximizing your contributions before the year ends. If you are 50 or older, take advantage of catch-up contributions. For 2024, you can contribute an additional $1,000 to an IRA and $7,500 to many employer-sponsored retirement plans. Increasing your retirement savings not only helps you build wealth but also reduces your taxable income.

Take Your Required Minimum Distribution (RMD)

If you are subject to RMDs, ensure that you withdraw the required amount by the end of the year. The SECURE 2.0 Act of 2022 raised the RMD age to 73 for individuals who turn 72 after December 31, 2022. Note that Roth IRAs are not subject to RMDs until after the original account owner’s death, and RMDs from designated Roth accounts in 401(k)s and 403(b)s are no longer required starting in 2024.

Make Charitable Contributions

If charitable giving is part of your financial strategy and you plan to itemize deductions, consider making your donations before the year ends. Ensure you have proper documentation for tax purposes, especially if donating securities or in-kind gifts. Consult with your wealth management team on how charitable contributions can also support your broader estate and tax planning goals.

Conduct a Year-End Tax Review

It’s a good idea to meet with your tax advisor to discuss the following:

• The potential benefits of Roth conversions
• Adjustments to your estimated taxes and withholding to avoid underpayment penalties
• Strategies like bunching itemized deductions (e.g., charitable contributions or medical expenses) into specific years
• Realizing any portfolio losses to offset gains and reduce your tax liability
• Reviewing your portfolio for potential capital gains distributions
• Understanding how any new tax legislation may impact you

Review Your Estate Plan

Ensure your estate plan is still aligned with your current financial goals. If it’s been a while since your last review, changes in your life or financial situation may require adjustments. This is particularly important if you’ve moved to a different state, as estate and tax laws vary by location. Coordinating with your wealth management team and estate planning attorney will ensure that your plan is up-to-date.

Assess Your Insurance Coverage

With changes in family circumstances, such as children graduating or taking on caregiving responsibilities, it’s important to review your insurance coverage. You may need to adjust your policies to ensure you are adequately protected. An insurance review can help you determine whether you’re underinsured, overinsured, or paying too much for coverage, helping you avoid potential financial strain due to unforeseen events.

Update Beneficiaries and Contact Information

Lastly, ensure that the beneficiaries listed on your investment accounts, retirement plans, insurance policies, and legal documents are current. It’s also important to update your contact information, including your email, phone number, and mailing address, to ensure all communications are received in a timely manner.

Conclusion

As you approach the end of the year, a thorough financial review and planning session will ensure you’re well-prepared for the year ahead. By taking proactive steps to address your investments, taxes, retirement contributions, and estate planning, you can optimize your financial situation and move forward with confidence. Partnering with your wealth management team to navigate these decisions can help you achieve your financial goals and maintain long-term financial security.