• Key Takeaways
• Investment Considerations
• Required Minimum Distributions (RMDs)
• Charitable Giving Strategies
• Retirement Account Considerations
• 529 Plan Contributions
• Tax Strategies
• Budgeting and Emergency Funds
• Sources

As the year draws to a close, it's essential to reflect on your financial strategies and make necessary adjustments. With significant events shaping the financial landscape in 2024, such as fluctuating interest rates and market highs, now is the time to consider practical financial moves that can set you up for success in 2025.

Key Takeaways

• Review your investment allocation and consider rebalancing.
• Don’t forget to take required minimum distributions (RMDs) if applicable.
• Explore charitable giving options to maximize tax benefits.
• Assess your retirement contributions and plan for the upcoming year.
• Ensure your estate planning documents are up to date.

Investment Considerations

1. Overall Allocation: Evaluate whether your investment mix aligns with your financial goals. Changes in your personal situation may necessitate adjustments.
2. Rebalancing: With the S&P 500 performing well, some sectors may have underperformed. Rebalancing your portfolio can help maintain your desired risk level.
3. Investment Policy Statement (IPS): Establishing an IPS can guide your investment decisions and keep you focused on your long-term objectives.
4. Review Cash Position: Consider moving cash to higher-yield accounts to maximize returns, especially as money market yields have increased.

Required Minimum Distributions (RMDs)

5. RMD Compliance: If you are 73 or older, ensure you take your RMDs to avoid penalties. This is crucial for maintaining compliance with IRS regulations.

Charitable Giving Strategies

6. Qualified Charitable Distributions (QCDs): If you’re 70½ or older, consider donating your RMD directly to charity, which can help reduce your taxable income.
7. Maximize Cash Contributions: The deduction for cash contributions to charity has increased. Consider maximizing your donations before the limit reverts in 2025.
8. Donate Appreciated Stocks: Donating stocks with significant gains can help you avoid capital gains taxes while supporting your favorite charities.
9. Utilize Donor-Advised Funds (DAFs): DAFs allow you to contribute assets for future charitable donations while receiving an immediate tax deduction.

Retirement Account Considerations

10. Roth IRA Conversions: Converting to a Roth IRA can be beneficial for tax planning, especially if you anticipate higher taxes in the future.
11. Beneficiary Updates: Regularly review and update beneficiary designations on retirement accounts to ensure your assets are distributed according to your wishes.
12. Estate Planning: If there have been changes in your family dynamics, consult with an estate planning attorney to update your documents accordingly.

529 Plan Contributions

13. Contribute to 529 Plans: Take advantage of tax benefits by contributing to a 529 college savings plan, especially if your state offers tax deductions.
14. Superfunding Options: Consider superfunding your 529 accounts to maximize tax-free contributions over five years.

Tax Strategies

15. Tax-Loss Harvesting: Selling securities at a loss can offset capital gains and reduce your taxable income.
16. Maximize Retirement Contributions: Review your contributions to employer-sponsored retirement plans and ensure you are on track to meet the maximum limits for the upcoming year.

Budgeting and Emergency Funds

17. Emergency Fund: Maintain an emergency fund that covers three to six months of expenses to safeguard against unexpected financial challenges.
18. Plan for Next Year’s Expenses: Reflect on your spending habits and plan for the upcoming year, especially considering rising costs.

By reviewing these strategies with your financial advisor, you can ensure your financial house is in order and lay the groundwork for a successful year ahead.

Sources

• 25 Financial Moves to Consider Before December 31 | Kiplinger, Kiplinger.