The Year-End Checklist

With just 20 days left in the year, the financial to-do list window is quickly closing. Clients are busy with their own work, families, and holiday planning and it is our job to ensure that their financial issues are completed by year-end. There are many moving parts for planners like us each December, but below are some of the more important we are addressing with clients.

1) Take your RMDs

If you are 73 or older, the IRS requires you to withdraw a minimum amount, known as a required minimum distribution (RMD), from qualified retirement accounts annually by December 31. Failing to withdraw the correct amount will result in penalties. If you just turned 73, you have until April 1, 2025, to take your 2024 RMD, but you must also take your 2025 RMD by December 31, 2025.

2) Harvest Losses/Gains

Year-end is an ideal time to assess your tax situation and consider tax-loss or tax-gain harvesting based on your income bracket and portfolio performance. Tax-loss harvesting involves selling investments at a loss to offset capital gains, while tax-gain harvesting entails selling appreciated assets strategically, such as in a lower tax year or when losses can offset gains. The deadline for these actions to count toward the 2024 tax year is December 31, 2024.

3) Max out Retirement Accounts

Maximizing contributions to tax-advantaged retirement accounts, like IRAs and 401(k)s, by year-end can reduce taxes and boost retirement savings. For 2024, contribution limits are $7,000 for IRAs ($8,000 if 50+), and $23,000 for 401(k)s (with an additional $7,500 for those 50+). The deadline for 401(k) contributions is December 31, 2024, while IRA contributions can be made until April 15, 2025.

4) Qualified Charitable Distributions (QCDs)

Year-end is a common time for charitable giving, which can provide tax benefits if you itemize deductions. Consider increasing your donations or making a qualified charitable distribution (QCD) from your IRA if you’re 70½ or older. A QCD counts toward your required minimum distribution (RMD) and avoids taxes for both you and the charity. To qualify for a 2024 tax deduction, make your donation or QCD by December 31, 2024.

5) Health Savings Account (HSA)

Investing in a Health Savings Account (HSA) offers triple tax advantages: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free. It helps you save for current and future healthcare costs while reducing taxable income.

6) Education Savings

A 529 plan is a tax-advantaged way to save for education expenses. Contributions grow tax-free, and withdrawals for qualified expenses are also tax-free. It offers flexibility to cover costs from K-12 to higher education, making it an effective tool for long-term education savings.

7) Schedule a meeting with us to discuss 2025 goals

If you have any year-end concerns reach out to our team. We stand ready to address them all.

2024 will end as the best year ever for Warren Capital and we thank you for the continued trust and confidence you place in us. Happy Holidays from all of us at Warren Capital and here’s to a prosperous New Year!