7 Year End Financial Planning Considerations

Benjamin Haas |



As we flip the page to December, we often turn our attention to shopping, holiday parties, gift giving and family gatherings. It may seem like just yesterday you were planning your 4th of July, or your week long summer vacation. Sure enough though, Thanksgiving has passed, electric bills are skyrocketing from all the lights and Christmas carols are playing 24/7 on the radio.

Time is flying by, but be sure to make some time for financial planning before turning the page on 2016. While certain tax decisions can wait until 2017, like Individual Retirement Account and Health Savings Account contributions, the last 4 weeks of the year are your last chance to make some important decisions that can help round out 2016 and help get 2017 started on the right foot.

Review your portfolio. A late fourth quarter rally after the election could mean another positive year for some domestic equity markets. Make sure your portfolio is re-balanced to your target allocation, which should be relative to your tolerance for risk and investment time horizon. Depending on the type of account, you might want to claim some gains or losses too – but check with your tax advisor first.

Take your required minimum distribution. If you’re required to take distributions from your retirement plan (based on age 70.5 rules), be sure to do so by December 31 or face a 50% penalty.

Check dependent status. Keep your college student qualified as your dependent by meeting the “support” test. Generally, your child cannot provide more than one-half of his or her own support, so check this. Add up the funds they received during the year. Do you need to increase your level of support before year-end in order to claim the exemption? It could be worth it.

Check all your deductibles. Have you met deductibles on certain insurance plans this year? Are you close to your out-of-pocket maximum for 2016? If so, it might be worth considering that extra doctor’s visit, or having that extra test or exam before January 1 rolls around and you’re stuck having to meet a new deductible or co-insurance.

Check your income. Was your earned income lower than usual? Maybe you should consider converting Traditional IRA assets to Roth IRA assets. Need deductions? Consider making charitable contributions, or making additional deferrals in your workplace retirement plan.

Think about your income needs for 2017. Do you have big plans for home projects or a trip? Are you playing catch-up from unexpected expenses this year? If you’re retired and collecting social security, your cost of living increase will be a lowly 0.3% next year. Will that be enough or should you consider generating some cash in your investment portfolio now and taking a distribution in 2016, to spread out some taxes and get ready for 2017?

Lastly, talk to your financial planner. The financial planning process is about reviewing options and making sure your financial life is in concert with your goals. Life is never a straight line, so be sure you’re on track by talking with your planner before the year is through. If you aren’t currently engaged with a planner, consider giving us a call. We’re here to align your personal values, vision and wealth, and would be happy to chat.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

No strategy assures success or protects against loss.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.


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