Money Moves For Your Year End Financial Checklist 

by Brian Pirri | Dec 12, 2017

Over the past year, many individuals and families have considered or developed a number of strategies to nurture and protect their wealth. As 2018 moves closer, we’ll share some money moves and strategies that may be beneficial to explore or revisit as the year comes to a close.

Consider adding to a 529 plan

A 529 plan is a state-sponsored investment account dedicated specifically to the education expenses of a beneficiary. While not as common as other methods to pay for college expenses, we’ve previously explained several benefits of a 529 plan including allowing anyone to contribute to a plan, as well as the fact that earnings are federal tax-free. Before ending 2017, it may be a good idea to consider opening or contributing to a 529 plan; A Forbes report notes that most people have until the end of the year “to take advantage of a state income tax deduction or a tax credit for contributing to a 529 account.” This report further explains that “contributions are considered ‘gifts’” and that individuals “can contribute up to $14,000 per year (or $28,000 for married couples ‘splitting’ the gift), per person, to qualify for the annual gift tax exclusion.”

Review Trustees and Beneficiaries

Earlier in the year, we discussed the importance of choosing a trustee or trustees as a support system for an estate plan. It may be time to perform a review of your trustee(s) and/or beneficiaries to determine if they’re meeting your needs if a significant amount of time has passed since designating these roles. And if you have no estate plan, it can be incredibly valuable to consider establishing one.

Charitable Giving

Many individuals give donations throughout the year; according to CNBC citing estimates from nonprofit rating site Charity Navigator, charitable giving becomes more common as the end of the year approaches, with 40 percent of donations being made during the last weeks of the year. Charity Navigator claims that charitable giving has grown significantly in the last two years, estimating about $390 billion donated in 2016 and indicating this year’s number may be higher.

Choosing qualified, honorable charities is important, so it’s helpful to properly research organizations of interest and look at the Internal Revenue Service’s guidelines regarding donations of goods and monetary contributions.

Review 401K contributions

The maximum contribution an employee can make to a 401(k) is $18,000 a year and $24,000 for employees aged 50 and up. This month is an opportune time to check how much has been contributed in 2017 and consider whether you’d like to reduce your earned income by contributing the maximum if you haven’t yet hit that threshold.

While tax preparation is not always one’s desired way of celebrating the holidays, some prefer to get it out of the way at the beginning of the year and set projections beforehand. While reviewing financial contributions and reducing taxable income, it can be beneficial to expand to a more thorough estimation of tax preparation.

Review financial planning goals

It’s helpful to keep your friends and family in the know about goals for financial planning, as circumstances and needs often evolve. This can include discussion about updates to day-to-day budgeting, plans and/or adjustments for long-term care, and establishing and adjusting plans for college expenses as well as retirement. It’s also helpful to maintain this discussion with trusted financial professionals to review goals, adjustments made or considered, and any concerns you may have. At New England Investment and Retirement Group, we recommend continuous discussion with various support systems both personal and professional no matter what stage you are in your financial planning strategy.