Broker Check

Your ultimate year-end financial checklist

December 14, 2023

In the whirlwind month of December, the last thing most people want to do is review their finances. Instead, they reserve this task for the new year. However, when you schedule a review with your financial representative in the final quarter, it becomes a means of meaningful reflection on the last year that will help you choose smarter goals for the next year.

Related: How to set and achieve financial goals for the new year

In keeping with your busy schedule, here are several financial items you should consider reviewing annually:

  1. Health insurance
  2. Retirement contributions and investments
  3. Charitable donations and gifting
  4. Budgeting
  5. Estate planning

1. Health insurance considerations

Open enrollment

For health insurance specifically, the end of the year marks the time for open enrollment. If you need to switch, modify, or enroll in a health insurance plan, now is the time to do so.

If you’re working with a financial professional, they can help you evaluate your employer’s options or self-employed solutions so you can get the right coverage at an appropriate price.

Flexible savings account

If you have a flexible savings account (FSA), the end of the year is the time to either use what is in the account (schedule that dentist appointment you’ve been putting off) or learn your employer’s protocol for leftover funds. Some employers offer a grace period or rollover up to a certain dollar amount for remaining funds in these accounts.

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2. Retirement and investment considerations

401(k) contributions

Review your contributions to your retirement accounts throughout the past year and determine if you have the capacity to increase these through the end of the year.

You can contribute up to $22,500 to your 401(k) plan for 2023. If you are 50 or older, you are eligible for an additional catch-up contribution of $7,500 in 2023.1

If you are unable to reach the maximum limit, try to increase your contributions to at least meet your employer’s maximum match for the year.

Related: Guide to retirement planning at every stage of life

Not saving for retirement early is the number one financial regret among Americans.

Bankrate’s Financial Security Index, May 2019

Required minimum distributions

A Required Minimum Distribution (RMD) is the minimum amount that must be withdrawn from select retirement plan accounts once you turn 72.

Investors with traditional IRAs or other types of employer-sponsored retirement plans may be required to begin taking distributions from these funds upon age 72.

The amount of the distribution is calculated based on IRS guidelines that take the account owner’s age and account value into consideration. Individuals who have inherited retirement assets may also be required to receive annual distributions from their inherited IRAs prior to December 31st.

Qualified retirement plans

Both individuals with a qualified retirement plan and business owners offering plans have opportunities to consider before year-end.

Individuals who take advantage of qualified retirement plans through their employer may decide to fully fund these plans via elective deferrals. Depending on the type of plan, a December 31st deadline may exist for these contributions.

Business owners may be looking for tax-advantaged ways to save for retirement or provide their employees with additional benefits. Your financial representative can help you decide which plan best fits your needs.

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3. Charitable donations and gifting

Charitable contributions

December 31st marks the deadline to include your charitable contribution on April’s tax return. To cut your tax bill and give back at the same time, be sure to retain detailed records, such as a bank or payroll deduction record or detailed written communication of your contribution.

529 plan contributions

529 plans are tax-advantaged investment vehicles that encourage saving for education expenses. Consider contributing to a college-funding account this holiday season.

Parents, grandparents, and other family members may find a contribution to an educational account more fulfilling than another toy or video game. In some states, contributions may be state-tax-deductible, so this gift benefits both the receiver and the giver!

Charitable IRA distributions

If you are over 72, you may consider contributing to a qualified charitable organization directly from your IRA. Older individuals who receive Required Minimum Distributions from their IRAs may find themselves in receipt of more cash flow than is necessary to sustain their lifestyle. To exclude these excess funds from annual income, the account owner may wish to perform a tax-free Qualified Charitable Distribution (QCD).

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4. Budgeting

Find a time at the end of the year to sit down with your household and your budget for the past year. Mark down what worked, what didn’t work, and any thoughts you have on revising the budget in the future, if necessary.

59% of Millennials, 54% of Gen-X, and 63% of Baby Boomers feel financially secure.
Bank of America, (2018), 2018 Better Money Habits Millennial Report.

Remember, stay realistic and focus on spending and saving based on your values. If you need help deciding how to distribute your income over the year, a personal financial representative can help.

5. Estate planning

Your estate documents are critical to check on at least an annual basis, especially if the past year has involved a major life event, such as a marriage, divorce, or any new children or grandchildren. Items to review include your will, trusts, and beneficiary forms.

Related: How to navigate estate planning with your adult children

As you prepare for a new year, think about these items and how they can help you going into the new year!

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For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.

Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty.

Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer’s official statement and should be read carefully before investing. Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investing in any state’s 529 Plan.