As we enter the final quarter of 2024, it is time to review important deadlines that affect your income taxes and financial plan. Year end is a great time to reflect and reorganize for the year to come. Below is a checklist that we will supply each year to assist you in year-end financial planning:

 

1.Fund Retirement Accounts – Remember to fund your company retirement accounts and IRAs prior to the funding deadline. Here is a list of employee contribution deadlines and contribution limits:

 

• Traditional and Roth IRAs – $7,000 ($8,000 if over 50) by April 15, 2025.

• SEP IRA – Up to $69,000 by tax filing deadline.

• SIMPLE IRA – $16,000 ($19,500 if over 50) by December 31st.

• 401(k) – $23,000 ($30,500 if over 50) by December 31st.

• Health Savings Account – $4,150 (single), $8,300 (family), $1,000 additional contribution if over 55 by April 15, 2025.

 

2. Fund 529 College Savings Accounts – 529 accounts offer tax-free savings for college education expenses. In many states (including South Carolina), you receive an income tax deduction for contributions. You may gift up to $18,000 per year per 529 account without incurring gift taxes (or make up to a $90,000 contribution and treat it as a five-calendar year gift). Contributions must be made by December 31st.

 

3. Consider Charitable Giving – Charitable gifts are tax deductible, assuming you itemize your deductions. A great way to further the income tax benefit of charitable giving is to give appreciated stock rather than cash. You avoid the capital gains of selling the stock and can use the cash you would have gifted to repurchase the shares. If you don’t have enough deductions to itemize but have a required minimum distribution from an IRA, consider gifting some of the distribution directly to charity to reduce the taxable distribution (remember to let your CPA know if you make a charitable gift directly from your IRA). Charitable gifts must be made by December 31st. Please contact us by December 5th if you are interested in gifting appreciated stock or making a qualified charitable gift from your IRA.

 

4. Review Cash Reserves – If cash has built up beyond your emergency savings goal, consider investing the cash to increase your passive income. If your emergency savings is getting low, create a plan to replenish the account.

 

5. Consider Annual Gift Exclusions:  You may gift up to $18,000 per recipient without incurring any federal gift taxes. Spouses together may gift up to $36,000 per recipient. Make gifts for the current tax year prior to December 31st.

 

6. Complete Required Minimum Distributions – If you are 73 or older in 2024 or have an inherited IRA, you must take a required minimum distribution (calculated using IRS guidelines) from your retirement plans (other than Roth IRAs) to avoid tax penalties. We will help you in completing distributions for the Charles Schwab accounts we manage, but please check on any necessary distributions for any accounts not managed by Verity Investment Partners.

 

7. Revisit Tax Planning: If your income was unusually high in 2024, consider ways to accelerate tax deductions to offset income and reduce taxes (For example – make future charitable gifts now). If your income was unusually low, consider ways to accelerate future income to utilize losses (For example – Roth IRA conversion).

 

8. Minimize Out of Pocket Health Care Costs – If you have already met your medical insurance deductible for the year and anticipate future health care needs, schedule medical visits/procedures prior to year-end to minimize out of pocket costs.

 

9. Deplete Flexible Spending Account – If you have a Flexible Spending Account through your employer for health care expenses, confirm the deadline for depleting the account and attempt to maximize the benefits by paying for any health care expenses you will need in the future.

 

10. Update Budget – As the year comes to an end, take time to review your spending and see how your expenses align with your goals for the year. Update your budget for 2025 and remember to focus your budget on spending that maximizes enjoyment and fulfillment.

 

11.Review Credit Report – Federal law requires access to your credit report for free once per year. Visit www.AnnualCreditReport.com to take advantage of this offer and review your credit report annually (at minimum) with the three main agencies: Transunion, Equifax, and Experian. Examine each credit line on the report in detail and be on the lookout for any accounts or loans you do not recognize or open accounts that you no longer use. Be sure to run this report for each family member. If you find information that is suspicious or incorrect, contact the company that issued the credit or the reporting agency that issued the report.

 

12.Reflect on Life Changes – Consider how your life has changed over the past year(s) and how those changes affect your life goals and needs. Does your investment plan, insurance protection, or estate plan documents (including IRA and insurance beneficiary designations) need to be updated to reflect the changes in your life goals?

 

At Verity Investment Partners, Andrew and Jessica (our Certified Financial Planners), are always available to assist with any financial planning questions or to help you in putting together a comprehensive financial plan. You can reach Andrew Jones at andrew@verityvip.com and Jessica Rusnock at jessica@verityvip.com or by calling our offices at 843-379-6661.