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End of the Year Wrap Up

End of the Year Wrap Up

December 09, 2022
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The end of the year always seems to sneak up on us, but I think it’s safe to say most of us are more than ready to be leaving 2022 behind. As we brace ourselves for the new year, it’s a good idea to check back in with your personal finances and make sure you have everything in order. Here are a few key things that you should revisit one more time before the ball drops on the current year.

Max Out Your Retirement Contributions 

If you’re not already taking full advantage of your employer’s match to your retirement account,  now’s the time to consider increasing your contribution. If your employer doesn’t offer one, or if  you’ve already maxed out your match, you might want to consider increasing contributions to an IRA which has tax advantages. As of January 1, 2020, the SECURE Act repealed the maximum age for contributions to a traditional IRA meaning you can contribute to a traditional IRA after age 70 ½ so long as you’ve earned income in 2020. You may also be able to deduct the  contribution depending on your gross income. Oh, and by the way, if you are drawing a Required Minimum Distribution from your retirement accounts, don’t forget to take it this year.  This requirement was waived in 2020 and 2021, but it is back by “popular demand” for the 2022 tax calendar year.  The 50% IRS tax penalty you would have next year will ensure that you never forget again.

Consider a Roth Conversion  

If you don’t qualify to make contributions to a Roth IRA, you might benefit from contributing to a Traditional IRA and then converting the funds to a Roth IRA. A Roth IRA can be an appealing  option for some because it does not include a required minimum distribution age. This means  that you can continue to save and grow tax-free dollars for the remainder of your life. While a  Roth conversion could be a great option for some, it could be a costly mistake for others. Make sure you are having the conversation with your financial advisor to see if it makes sense for you.

Check Your FSA and HSA

Typically, with a Flexible Spending Account (FSA), any unused balance is lost by the end of the year.  Whereas, a Health Savings Account (HSA), is very similar and can be carried forward from year to year.  This is also a good time to evaluate you 2023 contribution plan.  Are there any major out of pocket medical expenses you anticipate next year (orthodontic needs, new glasses, etc.).

Review Your Estate Plan  

Considering the current pandemic, many people are taking the time to update their estate plan.  Two of the most important documents to have up-to-date and on-hand are your medical and financial powers of attorney. For instance, to the  hospital or become incapacitated, you’ll need someone to handle your finances or make medical decisions on your behalf. Also, a Last Will and Testament.  Although, most any investment or insurance you may have will have named beneficiaries, there is still always something that may fall through the cracks.  A properly prepared Will can make sure your last intentions are followed.

Review your Goals 

Financial plans are created to keep us on track to achieve our long-term financial goals through all the market’s ups and downs. But sometimes, our goals need to be reassessed. Think back the goals you established at the beginning of the year and evaluate your progress. If you’re off track,  a financial professional can help you establish a game plan based on your personal financial situation.

Prepare and Plan for Life Events

 Prepare for next year by reviewing and selecting health insurance, flexible spending accounts (FSA), health savings accounts (HSA), and life, property, and casualty insurance. Discuss major life events with your advisor to ensure there is clarity in your current situation and direction for tomorrow. This includes family or employment changes and significant elective expenses (real estate purchases, college tuition payments, etc.). Begin to review any IRS updates or changes for 2023.

There are a lot of things that we all do by our lonesome, and then there are some things that we shouldn’t be afraid to ask help and guidance on.  Don’t be ashamed or embarrassed to ask for assistance with some of these things.  In the words of one my favorite childhood cartoons, GI Joe, “Knowing is half the battle.”  And if we can meet you “halfway” to serve your financial objectives, then we can all have a great end to the 2022 year. 

Blessings to you and yours. Have a Merry Christmas and Happy New Year.

-Dan