The end of the year is when a lot of deadlines come up.
So, as we head to the end of the year, now is a great time to make sure your financial plan
is still on track.
And it’s wise to use a checklist to see where you are and what you should do.
Here are seven of the most common and important items to review with your financial advisor:
1. Your goals
When you first met with your financial advisor, you outlined long-term goals and worked with your advisor to build a financial
plan to reach them. You have been working toward those goals ever since.
But have your goals changed? Or have other things changed that might make reaching those goals easier or more challenging?
If you’re really honest, the likelihood that something has changed is pretty high. Maybe you’ve had some health worries this
year, want to retire a little sooner, or perhaps you've discovered a new passion. The point is your advisor needs to know and your
financial plan needs to reflect these changes.
2. Your performance
This is one that gets a lot of attention, so it’s
unlikely you have to even ask. But it’s important
that you understand how you performed relative
to your goals as opposed to relative to indices
that might not be appropriate.
Sure, it helps to measure your results relative
to major market indices, but there isn't necessarily one
single index by which your performance should
be measured. And if you are not measuring your
performance against your goals and a group
of indices, how do you know whether you’re on
track or not?
3. Charitable gifts
Many nonprofits and charities ramp up their efforts at the end of the
year to ask for contributions. And many of us forget to contribute
until the end of the year, too. In fact, nearly one-third of all giving
happens in the month of December, and 12% of all giving happens in
the last three days of the year.1 Why wait?
4. 529 plan contributions
If you are funding a 529 college savings plan, be sure that you contribute the
maximum amount that you need for this year by Dec. 31. Most state
plans require your contributions to be postmarked by the deadline,
but you should check with your specific 529 plan for their contribution rules.
You can set up automatic contributions into these plans on a regular basis
to avoid a year-end scramble. Now is a good time to set up automatic
savings from your checking or savings account for next year.
5. Retirement plan contributions
Yes, you have until next April 15 to contribute to IRAs for the current tax year, but most other retirement plan contribution
deadlines are Dec. 31. This applies to establishing new plans such as simplified employee pension plans and SIMPLE
(Savings Incentive Match Plan for Employees) IRAs.
If you receive a bonus, make sure you tell your employer to put a portion of your bonus into your 401(k) or other retirement
savings plan at work.
6. Tax losses and gains
You must take all realized tax losses (or gains) in your portfolio by
Dec. 31. You should also review your year-to-date gains or
losses and any tax-loss carry-forwards from previous years with your
7. Required minimum distributions
First things, first: The penalty for not taking your
required minimum distributions (RMD) is 50% of
the total required distribution.
If you are over the age of 70 1/2 and have an IRA
account, the Internal Revenue Service requires
that you take a required minimum distribution from
your IRA account by April 1 following the year
you reach age 70 1/2. For all subsequent years,
including the year in which you were paid the
first RMD by April 1, you must take the RMD by
Dec. 31 of the year.
If you have multiple IRA accounts, you can choose
to take all of your distributions from one account
rather than from each. You should contact the
firm that holds your IRA account soon to ensure
that you complete the distribution by the deadline.
Be sure to act before the deadline to avoid the
Year-end is stressful enough
Year-end can be a very busy time, especially when you factor
in holiday shopping, family visits and social events. Just
be sure to meet with your advisor to take care of all these
financial planning items as soon as possible to avoid missing
deadlines. And remember that the bank, brokerage or
advisory firm that handles your accounts is processing tens
of thousands of year-end transactions, so you want to give
them ample time to handle your needs.
Important Disclosure Information
The article above was provided to Synovus by eMoney Advisor, LLC, and is used here with permission from eMoney or a third party content provider. eMoney does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. This information was provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
“Online Giving Statistics,” Charity Navigator, Accessed October 2019, https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=1360
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