Year-End Financial Planning Checklist
We’re now just a few short weeks away from December 31. While you likely have a lot on your mind regarding holiday planning, you absolutely can’t forget about your year-end financial planning.
Taking the time to do so does more than just give you peace of mind heading into 2025. You’re also putting your finances under the metaphorical microscope, which is a perfect opportunity to optimize your investments.
That’s why the Asset Advisory Services team put together this year-end financial planning checklist. Read on for the top 10 can’t-miss details to square away before you ring in the New Year.
1. Max Out Your Employer Retirement Plan Contributions
Before December 31, you’ll want to max out your employer retirement plan contributions. Don’t forget that the maximum increased as of this year—you can now contribute:
$23,000 to your 401(k) plan, or
$30,500 to your 401(k) if you’re 50 or older
This means the total combined contribution maximums, including your employer’s contribution, are:
$69,000 for employees under 50
$76,500 for employees aged 50 or older
Maxing these out is one of the best ways to ensure you aren’t leaving money on the table at year's end.
2. Make Qualified Charitable Contributions
Donating to qualified charities helps to minimize your total tax liability. Said another way, investing in a cause you care about can be a great way to save money on your taxes each year.
But what is a qualified charitable contribution? This refers to donating money or goods to an IRS-recognized, tax-exempt charity. Furthermore, you must receive nothing in return in order for the donation to count.
So, to be clear, donating to a relative’s GoFundMe is typically not tax-deductible. But donating to a 501(c)(3) organization, such as the American Red Cross, will help minimize your tax liability.
For tax year 2024, the limit on charitable donations of money is 60% of your adjusted gross income.
3. Establish a Donor Advised Fund
A donor advised fund (DAF) is almost always beneficial, but especially so when you establish one at the end of the year. This is the ideal time because doing so helps you further maximize tax deductions.
Basically, before the year closes, you contribute appreciated assets—think real estate or stocks. Not only does this give you a tax deduction for the full market value of your assets, but you can also potentially sidestep the capital gains tax you would’ve otherwise paid.
4. Review Your Federal Estimated Tax Payments
Year-end is a great time to check in and see if you’re on track with your federal estimated tax payments. When you take care of this before the New Year, you can avoid many expensive underpayment fines and penalties.
Plus, it’s an opportunity to account for any income adjustments. Holiday bonuses, dividend distributions, and proceeds from asset sales can all impact your estimated payment amount.
5. Take Your Required Minimum Distributions
Required Minimum Distributions, or RMDs, are mandatory withdrawals you’re required to take from certain retirement accounts once you’re age 73 or older, per the IRS.
The types of accounts subject to these rules include:
Traditional IRAs
SEP IRAs
SIMPLE IRAs
401(k), 403(b), and most other employer-sponsored plans
If you don’t take these distributions before January, you face steep noncompliance penalties—up to 25% of the amount not withdrawn. This can mean tens of thousands of dollars in unnecessary penalties!
6. Roth Conversions
To consider a Roth conversion means you’re thinking about moving money from a traditional retirement account, like a 401(k) or traditional IRA, into a Roth account.
During the move, you’ll pay taxes on the amount you convert. But once the funds are in your Roth account, future growth and withdrawals are tax-free.
You should make time to weigh this option during December because it fits in perfectly with tax planning. For example, review your current and projected future tax brackets. When you convert in a lower-income year, you pay less tax now—versus in retirement when you may be in a higher bracket.
7. Review Your Retirement Savings Goals and Strategies
A lot of things can change in a year, like the financial markets, tax laws, or your own life circumstances. That’s why December is an excellent time to review your retirement plans.
There are five key steps to take here:
Evaluate your progress towards your goals, and project to see if you’re saving enough to retire when you want to.
Maximize contributions to tax-advantaged accounts, and if you’re over 50, take advantage of catch-up contributions.
Review your portfolio and confirm whether your investments still align with your risk tolerance.
Adjust for any life changes from the past year, such as getting married or having a baby.
Consider tax diversification, such as contributing to both a traditional retirement account and a Roth account in order to reach retirement with both taxable and non-taxable income.
8. Reinvest Dividends or Use Them Strategically
What you do with your dividends can have a major effect on your portfolio. A year-end review helps you see whether your dividends are contributing to your financial goals.
If you’re focused on accumulation, consider reinvesting your dividends to compound your returns long-term. Be sure to have a dividend reinvestment plan (DRIP) in place.
Are you nearing retirement or already retired? You might use dividends as an additional source of income.
The big thing to keep in mind is that qualified dividends are taxed at lower capital gains rates. Non-qualified dividends are taxed as ordinary income. Take a close look at yours to determine how best to use them.
9. Plan for Upcoming Large Expenses
If you know you have a large expense coming up next year, start proactively planning for it now. This helps you avoid, for example, drawing from high-growth or tax-advantaged accounts too early.
Whether you want to buy a home, pay college tuition, or treat yourself to a big vacation, start anticipating the total expense. Think about using cash reserves or liquid assets to cover the costs instead of dipping into your retirement accounts.
Finally, create a budget, including a plan for where the funds will come from, or research low-interest financing options. Be sure to plan for potential capital gains taxes if you’ll be selling investments.
10. Verify Beneficiaries on Retirement Accounts and Insurance Policies
Your beneficiaries are the people who will inherit your assets when you’re gone—and this can often override what’s written in your will. It’s critical to confirm that the beneficiaries listed on your accounts reflect your current wishes.
You can also name secondary beneficiaries, which guarantees your assets are distributed according to your wishes if any primary beneficiaries can’t inherit. Finally, look at your estate plan to see whether there are any conflicts with your listed beneficiaries.
Though the end of the year is always a busy time for many reasons, it’s wise to set aside time for financial planning. We hope this year-end financial planning checklist helps you feel empowered to ensure your money works as hard as you do.
Still have questions? Contact the Asset Advisory Services team today at (561) 747-9550. With over 90 years of combined wealth management experience, we’re here to help you enjoy the fruits of your labor for years to come.