Your Year-End Financial Checklist

Year-End Financial Checklist.jpg

This article originally appeared in our monthly newsletter, Fiscal Therapy.
Please subscribe if you'd like to receive similar articles on a monthly basis.

What I’m thinking about: Your year-end financial checklist

With a month to go until the ball drops and we flip to 2019 (a.k.a. the year in which Blade Runner and its flying cars are set — we’re just a bit behind!), now is the time to make sure all your year-end tasks get done.  

Without further ado, here’s your year-end financial checklist.

1) Contribute to your retirement plan

December 31 is the hard deadline to make annual contributions to your employer-sponsored 401k plan, so don’t miss it!  (Same goes for 403b and 457 plans.)

You have until April 15th of next year to make 2018 contributions to your Roth and Traditional IRA accounts, but any Roth conversions must be completed by December 31.  (Keep in mind that under the new tax laws, you can no longer reverse a Roth conversion. It’s a good idea to consult with your tax advisor before doing a conversion to ensure you’ve considered all the relevant factors for your situation.)

Here’s a rundown on the contribution limits for 2018:

  • $18,500 for 401k, 403b, or 457 plans (with a $6k catch-up contribution if you’re 50 or older by year-end).

  • $5,500 for any combination of Roth and Traditional IRA contributions (or $6,500 if you’re 50 or older by year-end).

And here’s some good news for 2019: while we probably won’t have flying cars, contribution limits are going up!  The new annual limits will be $19,000 for 401k, 403b, and 457 plans (with the same $6k catch-up contribution if you’re 50 or older), and $6,000 for Roth and Traditional IRAs ($7,000 if you’re 50 or older by year end).

2) Contribute to your 529 college-saving accounts

If you have young children, then it’s usually smart to save for college using tax-advantaged 529 accounts.  Since contributions to 529 accounts count as gifts under federal tax law, you don’t want to contribute each year more than the annual gift tax exclusion ($15,000 per person per donee for 2018).  So make those contributions by December 31, otherwise you’ll lose that 2018 exclusion (though you can make a one-time $75k catch-up contribution as long as you follow the proper protocol).

If you’re using New York’s 529 plan, they will count your contribution towards 2018 as long as it is postmarked by December 31. And remember that you can deduct up to $5k of your contributions from your New York State tax return ($10k if you’re filing jointly).

3) Spend down FSA dollars

Amounts you contributed to your medical Flexible Spending Account (FSA) are generally “use it or lose it” — so use it!  The deadline is December 31, though some employers may offer a 2 ½ month grace period or a $500 rollover option.

Not sure what qualifies? Check your HR resources or online FSA account for a helpful breakdown. Here’s a good reference guide, but your HR department or online FSA account should also provide you with this breakdown.

Keep in mind that dollars contributed to a Health Savings Account (HSA) remain fully available for future use.  In fact, stockpiling funds in your tax-advantaged HSA is a solid way to supplement retirement savings, so there’s no rush to spend those down.

4) Give

Non-profits rely heavily on year-end giving to meet their funding goals for the year, so don’t forget to give to your favorite causes and organizations.  If you itemize deductions, keep good records of your gifts. Your accountant will thank you and it’s just good practice.

You can read more about our giving tips here, but one quick reminder is to consider donating appreciated stock.  You’ll avoid paying capital gains taxes and can deduct the fair market value of the stock on the date you donated it.  (Just be sure you’ve held the stock for more than one year, otherwise you can only deduct the stock’s cost basis.)

5) Plan some headspace

The holidays are often the busiest (and most stressful) time of the year, so it’s all the more important to find some downtime for reflection.  Set aside time with your partner (or yourself) to look back on the year’s highs and lows and to revisit your financial and life goals.

If your December is already packed, no worries — just go ahead now and block out time in early 2019 to visit these items. You’ll thank yourself later.

What I’m reading

More than 3 in 4 Americans are stressed about going into debt over the holidays — and technology’s not helping

By Jennifer Brozic, Credit Karma

A recent survey of a thousand adults in the U.S. suggests that social media is influencing our holiday spending choices — stunner, right?  Interestingly, for those who buy items on social media, 64% reported it’s typically unplanned, and a whopping 82% reported regretting these spontaneous purchases. The moral of the story?  Short of quitting social media, outline a gift-giving plan early in the holiday season and stick to it.

What It’s Really Like to Have a Trust Fund

By Anonymous, The Cut

Here’s an eye-opening look at what it looks like to grow up with family wealth.  But more importantly, this woman’s story illustrates how our money inevitably shapes — for better or worse — our relationships with family, friends, and our work.

I am nervous about maintaining the lifestyle that I’ve become accustomed to. But that’s also made me a lot more ambitious about my career and income goals. There’s nothing holding me back from making money. It’s up to me now.

Ready for more? Check out our online personal finance courses designed to address the most pressing money questions and help you develop a financial plan.