Where did it go??
So, here we are, December 6th, 2021. Though a little cliché, but I know that I have heard it more and more in the last month, “where did the year go?” If you are like me you have found yourself busy this year with, well for no better word, STUFF. And this stuff has fulfilled your life, brought you joy, and laughs. It likely brought some tears and sorrow. And it may have left you to wonder, with 24 days left in the year, is there anything that I should be considering before the “ball falls” on December 31st. Here is a list of few things that often get set to the side and never seem important to address in the last 2 weeks of the year:
- Many of you may have left lost opportunity aside to maximize your 401Ks or Roth 401Ks. Just a reminder, before the calendar year ends, you can contribute up to $19,500 into any combination of your 401K or Roth 401K. If you are over 50, you can contribute $6500 more as a catchup. Why do I mention this? If you are seeing a need for a final tax deduction, then manipulating more money to your deduction world with your 401K may be advisable. If you are looking to improve your investment “filing cabinet,” then putting to the Roth side may be best.
- HSA: If you have an HSA option with your health insurance plan, you may want to consider maxing our your pretax amount before the end of the year. If you are under 55, you can contribute $3600 for individual plans and $7200 for family plans. If you are over 55, you can do an extra $500 and $1000 respectfully. We all expect to have a medical bill eventually. Consider your tax bracket, for example, at 27% federal tax bracket, if you are paying your $200 doctor bill with your HSA account, you are saving $54 on that bill just by directing the payment from the pretax HSA. A tax deduction and savings for later. Also, keep in mind, you don’t lose your contributions year to year on this tax vehicle.
- IRA conversion opportunities. This term is used to move taxable 401K and IRA money to a tax free format in a ROTH IRA. When is this wise? There are many smart times to consider this: reduction in income this year, more deductions this year over others, some of the first retirement years, or even considering the long term growth compounded for decades if in a tax deferred vehicle. There are many correct answers, and many answers that make it a wise choice at uniquely different times for different people. This is most certainly a good time to have the discussion of Forward Accounting with your financial advisor.
Beyond these, with 24 days before we jump off the 2021 bus onto the 2022 bus, you should be aware of employment open enrollment options, wishes to make last minute 529 contributions for the kids and grandkids, gift tax exemption deadlines, or maybe charitable donation wishes or larger deposits to your Donor Advised Fund to level off tax bracket. The list goes on.
These are things that a qualified financial adviser should be assessing with you. This is a great time to make sure that you have scheduled your annual review to re-evaluate your goals, re-assess your financial direction, or maybe just to check in on your beneficiary selections. The greatest way to make sure that the 2021 year finds itself happily in the “rear view mirror” is to put your head down at the end of the night on this December 31st knowing you have prepared yourself and your family for a great jump start to a new year. Let us know if we can help.