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Year-End Money Moves

As 2018 winds down, it’s natural to focus on holiday activities. It’s also a great time to calculate your net worth, review your saving and spending for the year, and consider some smart moves to help you reach your financial goals. Here are a few to consider:

Rebalance your portfolio. Has a certain class of your investments grown disproportionately compared to others? You may want to move some assets to realign your original target ratios. This is an important step to maintain the balance of risk versus growth potential you’re comfortable with.

Maximize retirement account contributions. For 2018, you can make a pretax contribution totaling $5,500 to an IRA, $6,500 if you’re 50 or over. Contributions can be made through Tax Day in April of 2019 and applied to 2018. You can contribute $18,500 to your 401(k) or $24,500 if you’re 50 or older. At the very least, don’t leave any “free money” on the table if your employer matches a percentage of your 401(k) contributions.

Roll over or convert. Changed jobs or plan to? You may want to roll your 401(k) into an IRA that offers more investing options. Income lower than usual this year? Then consider moving money from a traditional IRA to a Roth IRA, reducing future required minimum distributions and tax consequences.

Fully fund 529 plans. Have a child or grandchild with a 529 plan? You can contribute up to $15,000 a year without triggering gift tax issues. The IRS also allows you to make up to five years’ worth of contributions at once while still avoiding gift tax consequences. That means an individual can make a one-time contribution of $75,000; a couple can make a $150,000 contribution.

Use them before you lose them. Met your annual health insurance deductible? Schedule preventative care visits. If you have a Flexible Spending Account (FSA), use any money that won’t roll over into the next year. If you have a Health Savings Account (HSA), make sure your contributions reach the maximum allowed – $3,450. HSAs are great savings vehicles since contributions are not subject to federal taxes, and withdrawals used for qualifying medical expenses aren’t either.

We can help you evaluate if any of these year-end money moves are right for you. Call our office today to get started or schedule an appointment for a consultation.

(We do not provide tax advice; coordinate with your tax advisor regarding your specific situation.)

Year-End Money Moves

by Marcus F. Johnson, CFPⓇ time to read: 2 min