By: Andrew Rosen, CFP®, CEP®

With yearend upon us, life can get quite hectic. We’ve got vacations, holidays, and quality family time to juggle. While planning for all these, let’s make sure you don’t lose sight of some very important end of year financial planning tips.

My top ten:

1.Maximize your retirement savings. If able, adjust those final paychecks to make sure you contribute the $18,500 (if under 50) or the additional catch-up dollars of $6,000 (if 50 or older). There are two important notes to consider though. First, take advantage of the $6,000 catch-up if you turned 50 any time during 2018. Second, make sure your employer didn’t over contribute to your 401(k). Usually if this happens there are ways to rectify it. But, it’s better to avoid all together.

2.Make those charitable contributions now for 2019. If this was a high tax year and you plan to make charitable contributions next year, consider making those payments now. Heck, why not use a donor advised fund or pay now with a credit card? You can even get the deduction this year and make the payment next year. These are great ways to increase your itemized deductions, especially with the new tax law changes.

3.Understand the new tax laws pertaining to standard vs. itemized deductions. It’s important to understand the new changes before year end (even if only at a high level). See how it impacts you specifically. Many will no longer qualify for itemizing for one of two reasons. First, the standard deduction for a married filer is now $24,000. Thus, normal itemization generally falls under that $24,000 threshold. Second, you are now capped on certain categories for itemizing (such as only being able to itemize $10,000 of state and property tax combined). Therefore, it’s much less likely you’ll be over the standard deduction threshold. To read more, check out one of my earlier blogs from this year on the new tax law changes.

4.Review your benefit deductions. Many people recently enrolled in their employers benefit program for next year. This is a good time to make a list of those elections and check it twice. Any issues that arise should be fixed now, before you forget.

5.Get every last dollar possible into those Health Care Savings accounts. For 2018, you have until April 15th to contribute the limit of $6,900 for a family (or half that for an individual). There is a catch-up here as well of $1,000; however, that only goes in affect after reaching age 55. Want to know how I feel about H.S.A accounts? Read my blog on them. You’ll see my thoughts on this powerful planning tool.

6.Spend those Flexible Spending Account funds ASAP. Unlike your Health Care Spending accounts, your F.S.A. accounts must be used by year end or you risk losing those dollars. This is why you’ll see people rushing to buy last minute prescription glasses before their dollars disappear. It’s important to check with your employer, though. Sometimes they offer a reprieve. I’ve seen offers of a two and a half month grace period or allowing you to rollover $500 into the next year (but never both).

7.Don’t forget those Roth and Traditional IRA contributions, either. Much like the H.S.A. accounts, you have until April 15th to make eligible contribute for 2018. The maximum one can contribute into a Roth or Traditional IRA is $5,500 (plus the $1,000 catch up if 50 or older). There are a lot of rules on eligibility, so be careful. However, these can be great ways to tax diversify your funds.

8.You can no longer recharacterize a conversion from a Traditional IRA to a Roth IRA. This means once done, the decision is final. Many of us are still considering this and will wait until the last minute to do it. It’s important to note there is still time to convert some part of that IRA to a Roth before year end. Now that most people know their 2018 earnings, they can decide to convert some portion (up to a certain taxable level) of which they are comfortable.

9.Take those Required Minimum Distributions fast! If you turned 70.5 in the first part of 2018 (or are already there), you must start taking your RMDs out of your IRAs. The penalty for not doing so can be quite steep (50%). Before the clock hits midnight on December 31st, make sure you’ve made arrangements.

10.Now is the time to gift to family. (I’m not talking about that new sweater!) Rather, any individual can gift $15,000 to any person before year end without having to file a gift return. If married, you and your spouse can gift $30,000 to any individual you choose. For those trying to remove assets from their estate, or want to help out family or friends, consider gifting now.

Tis the season of love.

Like one of my favorite Broadway musicals (Rent) suggests, it’s the season of love. It’s also the season of change. Although you should be spending as much time as possible with loved ones, carve out a few minutes to take care of your financial affairs.  You’ll want to take advantage of year end planning tips before it is too late.

What are you waiting for? Get to it!   If you’d like to chat about any of these tips or idea, do not hesitate to give a call (302-765-3500) or an email.  Best wishes for a Happy New Year.

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Andrew Rosen

In his role as Financial Planner, Andrew forges lifelong relationships with clients.  He coaches them through all stages of life and guides them to better achieve their life goals.  For more information about Andrew or the other firm partners, Kyle Hill and David Levy, click the link below.

Find out more about Andrew Rosen, CFP®, CEP®
Find out more about Kyle Hill, CFP®
Find out more about David Levy, CFP®

Financial planning and Investment advisory services offered through Diversified Financial Consultants, LLC, a registered investment advisor. Securities offered through Securities Service Network, LLC, Member FINRASIPC .  Associates of Diversified Financial Consultants are registered representatives of Securities Service Network, LLC, a registered broker/dealer, 9729 Cogdill Road, Knoxville, TN 37932. (800) 264-5499.