Planning Your Finances: 4 Moves Before Year-End

As we approach the end of the year, it's the perfect time to reflect on your financial goals and take charge of your personal finances. I understand that financial tasks can seem overwhelming, but taking proactive steps now can lead to significant future benefits. Here are four actionable strategies you can implement to enhance your financial well-being before December 31st.

Roth IRA Conversions

Roth IRA conversions involve transferring funds from a traditional IRA to a Roth IRA, offering potential advantages if you anticipate being in a lower tax bracket this year. Consider this move as it allows for future tax-free withdrawals, though it's not universally beneficial for everyone. Evaluating this strategy annually based on your specific financial situation is crucial.

Maximize Retirement Contributions

Seize the opportunity to maximize your retirement contributions. For 2025, you can contribute up to $23,500 to your 401(k), with an additional $7,500 catch-up contribution if you're over 50. For traditional or Roth IRAs, the limit is $7,000 with an extra $1,000 catch-up contribution for those over 50. These contributions not only lower your taxable income for the year but also bolster your future financial security.

Strategize Charitable Giving

Consider implementing strategic charitable giving methods, such as donation bunching or utilizing a donor-advised fund. If you're over 70½, using a Qualified Charitable Distribution (QCD) from an IRA can also fulfill your required minimum distribution upon turning 73. These approaches can make your generosity more impactful both for you and the beneficiaries.

Fund Your Health Savings Account (HSA)

Funding your HSA is a smart move with triple tax benefits: contributions are deductible, gains are tax-free, and withdrawals for qualified expenses are tax-free. For 2025, the limits are $4,300 for individuals and $8,550 for families. HSAs serve as effective financial tools for both immediate and long-term medical expenses.

Taking a small amount of time now to focus on these strategies can make a profound difference in your financial future. Remember that these strategies might not suit everyone, and it's wise to consult with a financial advisor or certified public accountant (CPA) to review your options. Now is the perfect time to ponder your financial strategies and perhaps even schedule a financial check-in.