End-of-year Financial Checklist

The stress of the holidays isn’t the only thing rapidly approaching during this time of year. While there are likely many tasks taking priority in your mind, don’t lose sight of the upcoming financial deadlines. Letting these deadlines pass without taking action can have significant repercussions on your financial strategy for this year and for years to come. 

Here are 8 tasks that should be on your end-of-year financial checklist based on upcoming deadlines.

Max out your 401(k) contributions

If you’re planning to contribute the maximum of $19,500 ($26,000 if you are 50 or over) to your 401(k) for the year, do so by December 31st. Especially if your company offers an end-of-year bonus, you’ll want to consider upping your contribution to reach the limit if possible, minimize your taxable income, as well as the company’s match if you aren’t already maximizing it. 

You likely only have a paycheck or two coming before year-end, so make your contribution changes immediately,” urges Lead Advisor Tony Jones.

Take required minimum distributions (for those over 72)

For all tax-deferred retirement accounts, required minimum distributions (RMDs) must be taken if you are 72 or older. If you’ve just turned 72, you have until April 1 to take your first RMD. 

If you’re over 72, you must take your RMD before December 31st to avoid penalties. Penalties may be up to 50% of the amount not taken by the deadline.

“Inherited IRAs have their own rules, but the December deadline and aforementioned penalties still apply,” adds Tony. 

Contribute to your flexible spending account and use expiring funds

If you have a major medical expense coming this month, then consider saving some tax dollars by putting money into your flexible spending account (FSA). Otherwise, Tony concludes, you may want to stop contributing to avoid losing any FSA dollars that you’re not planning to spend in the next few weeks. You must spend the pre-tax FSA savings before December 31st to avoid losing them — they do not carry over into the new year. 

Contribution limits for healthcare flexible spending accounts for 2021 are $2,750 ($5,000 for dependent FSAs).

Give to charitable causes

The holidays are the perfect time to give back, and December is traditionally the month with the highest percentage of charitable contributions made compared to other months, according to the Giving Institute. The holiday spirit isn’t the only thing behind that statistic, though, because you have until December 31st to make charitable contributions and use eligible donations as a tax write-off for the year.  

“Aside from cash, you may want to consider assets with low-cost basis as well,” Tony explains. “Just consult your tax accountant to learn how you can benefit.”

Download and review your credit report

Take advantage of the option to pull your free annual credit reports for Experian, Equifax, and TransUnion through annualcreditreport.com. It doesn’t hurt to check in on your credit score and monitor for any possible fraudulent activity.

Enroll in healthcare benefits through your employer

The open enrollment period typically starts around October and ends on December 15th. In order for your benefits to kick in by January 1st, you must enroll in a health insurance plan by that deadline. 

If you miss the open enrollment deadline, you may be stuck with your previous year’s insurance plan or no coverage at all. If you or your family may be in need of health insurance coverage for the following year, you don’t want to miss this deadline. Be sure to take advantage of this employer benefit if it is available to you.

Contribute to your children’s/grandchildren's college funds

While there is no annual deadline specifically for contributions made to a 529 or other educational funding, 529 plans typically see a spike in contributions toward the end of the year as holiday gifts are made by grandparents and other family members. Contributions made to a 529 plan account are considered gifts to the IRS and are subject to gift-tax rules. In order to receive annual gift-tax exclusions, you should make contributions up to $15,000 ($30,000 if married) by December 31st.

Special tax rules may apply to different types of education funding plans. Check with your tax or financial professional to learn about any tax deductions available to your plan’s contributions.

Meet with a financial professional

Whether or not you’re already working with a financial advisor or planner, the end of the year can be a good time to schedule an appointment to review your finances with a professional. This can help ensure that you’ve dotted your I’s and crossed your T’s for this year and help you get a step ahead of your planning for the new year. 

Even if you’ve completed all the items listed above, a financial professional can help you identify additional opportunities to optimize your investment and tax strategies before the end of the year.

rebel Financial offers free first meetings and 30-day trials if you’d like to learn more about how working with one of our advisors can benefit you before committing. Click here to schedule your complimentary appointment.

This article was written for information purposes only and its content should not be construed by any consumer and/or prospective client as rebel Financial’s solicitation to affect, or attempt to affect transactions in securities, or the rendering of personalized investment advice for compensation. No client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from rebel Financial, or from any other investment professional. See our disclosures page for more information.


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