As the year winds down, it’s an ideal time to review key aspects of your financial life and ensure you’re fulfilling your obligations and making the most of potential opportunities. But it can be challenging to know where to start. Whether you’re focused on building wealth, mitigating taxes, or preparing for retirement in 2025, here’s a checklist to help you start the new year off on the right foot.
Review Your Retirement Contributions
Maximizing contributions to your retirement accounts can help reduce your taxable income and bolster your family’s savings for the future. Check to see if you’ve reached the 2024 contribution limits for your:
- 401(k): Up to $23,000 (or $30,000 for those over 50).1
- IRA or Roth IRA: Up to $7,000 (or $8,000 if over 50).2
- SEP IRAs: Up to $69,000 or 25% of an employee’s annual pay.3
- Simple IRAs: Up to $16,000 (or $19,500 if over 50).3
If you’re 73 or older, it’s also critical to take your required minimum distributions (RMDs)for your traditional IRAs or 401(k) 2024 by December 31st to avoid a significant tax penalty. You may also want to consider qualified charitable distributions (QDCs), which allow those 70½ or older to donate up to $105,000 to one or more charities from your taxable IRA rather than taking RMDs.4
Assess Your Medicare and Insurance Needs
If you’re nearly 65 or are already enrolled, review your Medicare options before the Annual Enrollment Period ends on December 7.5. Review your plan—including any premium changes, prescription drug coverage updates, or other adjustments your insurance company has announced for 2025—and determine whether it still aligns with your healthcare needs and your lifestyle.
If you’ve purchased a home, started a new business, or welcomed a child in 2024, it’s essential to review all your insurance policies (including life, liability, home, and disability). When in doubt, it’s better to err on the side of caution and invest in extra coverage to protect yourself, your loved ones, and your assets.
Take Stock of Your Investment Portfolio
Sit down with your financial advisor to review your portfolio and decide whether adjustments should be made. Possible questions to discuss:
- Does your asset allocation align with your goals?
- Has your risk tolerance shifted?
- Are you nearing retirement?
- Is your portfolio tax-diversified?
- Does a Roth conversion make sense this year?
- Have your income or liquidity needs changed?
- Did you see large investment losses or capital gains?
If you have capital gains this year, consider “tax-loss harvesting” or selling nonprofitable investments at a loss to offset capital gains taxes incurred from the sale of more profitable investments.
If your total capital losses are greater than your gains for 2024, you may be able to deduct up to $3,000 of these losses from your ordinary income—and carry over and deduct any remaining amount on future tax returns.6
Review Your Charitable Giving Strategies
Charitable giving enables you to support causes you care about while reducing your taxable income. In addition to considering qualified charitable donations, speak with your advisor about the following strategies:
- Donating appreciated assets: You can deduct the fair market value of an appreciated asset you donate without incurring capital gains taxes—up to 30% of your adjusted gross income.7
- Bunching your donations: If you group charitable contributions into a single tax year rather than spreading them over several, you can maximize your itemized deductions.
- Using donor-advised funds (DAFs): By setting up a DAF and funding it with cash, securities, or assets, you may become eligible for an immediate tax deduction. Your funds can grow tax-free as you determine which qualified charities to support—and when you want to give.8
Update Your Estate Plan
Estate planning is a process, not a destination. It’s important to review your will, trusts, and other documents and update them to reflect major life events, including marriage, divorce, birth or adoption, death, illness, and retirement—or significant changes to your income, the value of your assets, or any financial liabilities. Be sure to check your beneficiary, trustee, and other designations as well to ensure they remain accurate.
Another significant estate planning consideration is taxes. For 2024, you can support your loved ones—and reduce the value of your taxable estate—by gifting up to $18,000 per person without triggering gift taxes.9 The 2024 lifetime gift and estate tax exemption is $13.61 million for individuals (and $27.22 million for married couples filing jointly), but these are scheduled to sunset at the end of 2025 to around $7 million per individual.10
Simplify Your Year-End Planning
The end of the year provides a unique opportunity to review your financial affairs and set you and your family up for success in 2025.
Our team can empower you with objective advice, offer unique alternative investment opportunities, and ensure that your comprehensive wealth plan is aligned with your goals for today and tomorrow.
Let’s run through your financial checklist.
Sources
1 https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000
2 https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
3 https://www.bankrate.com/retirement/sep-ira-vs-simple-ira/
4 https://www.fidelitycharitable.org/guidance/philanthropy/qualified-charitable-distribution.html
5 https://www.healthpartners.com/blog/medicare-open-annual-enrollment-period-aep/
6 https://www.irs.gov/taxtopics/tc409
7 https://advisors.vanguard.com/insights/article/keep-clients-on-track-with-our-yearend-planning-checklist
8 https://www.fidelitycharitable.org/guidance/philanthropy/what-is-a-donor-advised-fund.html
9 https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024
10 https://www.forbes.com/sites/kristinmckenna/2024/06/25/major-tax-changes-are-coming-in-2026-are-you-ready/
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