header shape
header illustration arc

Financial Year-End Checklist

Welcome to the final couple of months of 2021! Before we close this year, let’s make sure we optimize your finances with the following checklist. Please, contact your advisor for specific guidance.

1 | Max Out Retirement Accounts

Don’t forget to put as much as you can (up to $19,500 or $26,000 if age 50 or older) into your 401(k) plan. If you plan to fund an IRA or Roth IRA (up to $6,000 or $7,000 if age 50 or older), you have until April 15th, 2022, to make contributions for 2021.

2 | Required Minimum Distributions (RMD)

Unlike 2020, Required Minimum Distributions will not be waived for 2021. If you are subject to RMD’s, remember to take them before year-end.

3 | Qualified Charitable Distribution (QCD)

If you anticipate giving to a charity in 2020, consider a Qualified Charitable Distribution. A QCD is a donation from your IRA directly to the charity of your choosing. If you qualify for a QCD (over the age of 70 ½ with an IRA), consider this strategy vs. paying the charity directly, it may save you a significant amount in tax.

4 | Roth Conversions

If you are retired (or have a low income) and under the age of 72, you may benefit from a Roth Conversion. If you have a funded IRA, this strategy moves funds from a Traditional IRA to a Roth IRA. This transfer is taxable, with the idea that we intentionally pay a lower tax rate “now” for the benefit of tax-free growth moving forward. It also will lower your future RMD amount.

5 | Tax Loss Harvesting

If you have a taxable capital gain in 2021, you may consider selling a position at a capital loss to offset the gain. However, this example only works if the asset you are selling should be sold! The strategy is to accelerate the loss before year-end to offset the capital gain that occurred in 2021.

6 | Gifting/Donation

Gift | If you plan to give money to an individual (not a charity) up to the $15,000 gift tax exclusion. Remember to do so before the end of the year. You can still make the gift next year, but you will be utilizing next year’s exclusion.

Donation | Keep your receipts for 2021 donations to charity. You may be able to take a $300 deduction ($600 if married filing joint) next tax season.

7 | Check your Federal Withholding

Look at your most recent paystub and perform a quick analysis to determine if you are withholding enough. This practice is good to do now, so you can estimate if you will owe on April 15th, 2022.

 8 | Keep Supply Shortages and your Budget in Mind

The holidays are stressful! With the current supply shortage and an increase in demand, you may find that the specific toy your child wants is not in stock! Remember, shop a bit sooner this year, and stick to your holiday budget!

Sterling J. Searcy, Jr. | CPA
Financial Advisor