Seven Year-End Financial Tasks to Check Off Your To-Do List

The end of the year is already chockfull of important things to do, but don’t let these seven fall through the cracks. You’ll thank yourself in 2024.

A woman has a notepad in front of her while working on her computer.
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We are now well passed the Oct. 15 tax deadline, which means the best time for both tax and retirement planning is now. Accountants have more time for tax-planning meetings, and as 2023 wraps up, you can reflect on the year and still make changes to certain financial matters. Here are some things you may want to consider in your year-end tax and retirement review.

1. Ask your adviser about tax-loss harvesting.

Taking the time to analyze your portfolio toward the end of the year is important to determine if you can offset taxable income by harvesting capital losses. You may also have tax-loss carryforwards that can reduce your 2023 tax bill. Ask your adviser to see if tax-loss harvesting may improve your situation.

2. Contribute to your pre-tax retirement accounts.

Double-check your contributions to accounts such as 401(k)s, 403(b)s and SIMPLE IRAs so that you are on pace to maximize contributions. If you are age 50 or older, you can contribute an extra catch-up amount. While you must do this by Dec. 31 for these accounts, you have until April 15, 2024 (and potentially until Oct. 15, if you file an extension) to make traditional, Roth and SEP IRA contributions.

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3. Convert your traditional IRA to a Roth.

Roth IRAs are generally preferable to traditional IRAs mostly because they are exempt from RMDs (required minimum distributions), and the withdrawals are tax-free. There are many considerations to determine if a Roth conversion makes sense, but if you want to make the conversion for 2023, it needs to be done by Dec. 31.

4. Reassess your risk tolerance.

Year-end is a great time to reflect on life and career changes that may have occurred over the year — those changes can make a difference in your optimal level of risk tolerance. Reassessing your risk tolerance on an annual basis with your adviser may mean adjusting your portfolio to meet that new tolerance.

5. Review your RMDs.

If you turn 73 this year, you must begin taking RMDs. There is a significant tax applied if you fail to take the RMD on time, so this is one of the most important items to make sure gets checked off the list.

6. Make charitable contributions.

There are several strategies that could be applied to maximize charitable impact while minimizing taxes. Here are just a few:

  • Eliminate capital gains tax by donating appreciated stock rather than cash.
  • Make a qualified charitable distribution (QCD) to satisfy your RMD.
  • Consider opening a donor-advised fund — you can take a tax deduction for your contributions, which then grow tax-free.

7. Fund investing accounts for your dependents.

If you plan on making contributions to investment accounts for your kids, now is a great time to make sure those are funded to the desired levels. Here are two options:

  • Custodial Roth IRAs. Tax-free growth; contributions can be withdrawn tax-free. Note that parents can make contributions only if their child earned income for the year. The current maximum annual contribution is $6,500, or the total of a child’s earned income for the year — whichever is less.
  • 529 college savings plans. High contribution limits; withdrawals for school-related expenses are tax-free. Gifts to 529 plans can total up to $17,000 per individual or as much as $85,000 if the parent chooses the five-year election. This election allows parents to supercharge their savings and treats this large lump sum as if it were spread over five years.

The above checklist is by no means comprehensive. With so many items to check off the list and specific considerations for each one, depending on your unique situation, year-end financial tasks can be daunting. This is the time of the year you will want to rely on your tax accountant and financial adviser to help you navigate these choices.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Stacy Francis, CFP®, CDFA®, CES™
President & CEO, Francis Financial Inc.

Stacy is a nationally recognized financial expert and the President and CEO of Francis Financial Inc., which she founded 15 years ago. She is a Certified Financial Planner® (CFP®) and Certified Divorce Financial Analyst® (CDFA®) who provides advice to women going through transitions, such as divorce, widowhood and sudden wealth. She is also the founder of Savvy Ladies™, a nonprofit that has provided free personal finance education and resources to over 15,000 women.