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Year-end Financial Planning Tips

The end of the year is a great time to review your finances and complete any last-minute financial housekeeping. Even this late in the game, there are changes you can make to ensure that you’re not leaving money on the table and setting yourself up for strong financial footing in 2018.

Here some tips to consider:

Health Care-Related Tips

Dental or vision benefits: Make sure you have used up your benefits for the year. These types of benefits are often dollar limited. For example, you might have a $1,500 dental benefit per year that doesn’t roll-over year-to-year. So, if you need work done and haven’t used your full benefits, it’s better to get it done this year and start next year with another $1,500 benefit.

Medical:  If you’ve already met your deductibles and still need some medical services, try to visit the doctor before the end of the year because the bulk of the cost may be borne by the insurance company. If you wait until next year, then you have to start all over again with a new deductible, and you may be responsible for most of the cost for a service that could have been primarily covered by insurance.

Flexible Spending Accounts: Check the balances in your flexible spending accounts.  If you still have funds to use, it’s best to try to use them by year end. These plans are “use it or lose it,” so if you don’t spend the money, you forfeit it.  Often companies have a grace period of 2.5 months into next year, but it’s wise to check the timeframe to be sure.


Retirement-Related Tips

401(k).  Make sure you at least contribute the amount needed to qualify for any company match. You still may have one payroll period left to make an adjustment, or if you have a year-end bonus, you may be able to designate that part of that amount go into your 401(k) plan. If you don’t contribute enough to get the company match, you’re forfeiting a part of your salary.  Also, you can do some planning for next year by making sure you increase your contribution to get the full match or to simply increase your overall contributions for 2018.

Check retirement account beneficiaries. It always wise to ensure that the beneficiary information for any IRA, 401(k) or pension plans you may have is up-to-date and accurate. Adding this task to your end-of-the year inventory will make it easy to remember to make any changes if necessary.


Tax Tips

Investment Tax Losses.  If you have taxable investment accounts and you have securities that have declined in value that you no longer want to own, you can take the tax loss to offset other investment capital gains or deduct up to $3,000 of the loss against your ordinary income.

Required Minimum Distributions (RMDs).  For people over age 70 and a half who have IRA accounts, they must take a required minimum distribution from their IRAs every year. You need to get these done before December 31st or the IRS penalty is 50% of the amount that should have been distributed. And if you have an inherited IRA (maybe from a parent or grandparent), you often won’t get a notice about your RMD for the year, so you need to get involved in calculating the amount and making sure it is distributed.

Look for tax saving deductions and credits. If you’ve been considering buying an electric car or making a donation to your favorite charity, now is the time to time to act. Making a move before the year end may qualify you for tax credits for the 2017 tax year. For example, you can currently earn a credit of up to $7,500 for purchasing certain qualifying plug-in electric cars. Investing in solar energy systems may also provide you with a tax credit. If you are interested in learning more about energy efficient products and available tax credits, visit www.energystar.gov

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