For Mark Roberts’ Use: Like most people, you’re probably quite busy at this time of year. We hope you’re enjoying a wonderful holiday season! But since many financial planning actions must be taken before the end of the year, let’s pause for a moment and discuss five things you need to do before December 31.
If you’re still working… Look at your last pay stub. This is one of the quickest ways to evaluate your financial planning decisions. Are you contributing all that you can to your retirement fund? What about a health savings account, if you’re eligible for one?
Increase your retirement account contributions. Did you reach the maximum allowable contribution this year? The IRS allows you to contribute $18,000 to your tax-advantaged retirement account (such as a 401k plan) this year. If you’re over age 50, you can contribute an additional $6,000. At the very least, make sure you contribute enough to earn your maximum employer match for 2016.
If you expect a raise at the beginning of the year, your paychecks will be larger starting in January. Enjoy your raise, but remember to divert about half of it to additional retirement savings, if you haven’t already maxed out your contributions.
Open and fund an IRA. If you’ve already maxed out your 401k contributions, or you don’t have a 401k, considering opening and funding an Individual Retirement Account. You have to make these contributions by April 15 in order to claim the deduction on your taxes.
Make your charitable donations. If you itemize your taxes and claim a deduction for charitable donations, you must make those gifts by December 31 in order to claim them on your taxes in the spring. Remember to keep accurate records, and donate to an IRS qualified charity.
If you’re retired… Take your required minimum distribution. Once you reach age 70 ½, you must take required minimum distributions from your retirement account or face a penalty at tax time. If you’re getting close to that age, give us a call and we can help you decide on the right time to take your distribution.
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