End-of-the-Year Financial “To Do” List

November 30, 2023

All of us can benefit from taking a step back and reviewing our entire financial picture in a holistic way. It's also important to consider and plan for what might come next in relation to our financial plans. At B. Riley Wealth, we care about your financial well-being, so we've gathered some helpful tips and valuable insights to consider before year end and in anticipation of starting the new year on the right footing.

The deadline for implementing investment and tax-related changes to financial plans for the upcoming year is December 31.

Review your portfolio

Start by looking at your portfolio for tax efficiency. Obtain a copy of your year-to-date (YTD) capital gains and losses report from your financial advisor. In assessing how your investments are performing or underperforming, it's likely you'll find that some of your holdings have incurred a loss this year while others have done well. Check your asset allocation, discuss what's working and what isn't, with your financial advisor, and if appropriate, have them rebalance your portfolio based on that information.

If there are any unrealized losses in your holdings, you may consider selling the investment to write off the loss. You can take losses to the extent of realized gains plus an additional $3,000 in losses to offset other income. For example, if you have $35,000 in realized profits, you can take up to $38,000 in realized losses and show a $3,000 loss on your return to offset other income. It cannot be overstated, however, that there are stringent rules governing the sale of investments, and this should not be done without the assistance of your financial advisor.

Take your Required Minimum Distribution (RMD)

If you use a retirement account and are 73 years or older, the IRS requires that every year, you take an RMD from that account. If you have an inherited IRA, the IRS has waived any penalties in 2023 for not taking the RMD for beneficiaries who inherited from an individual who had already started taking the RMD. For individuals who inherited an IRA from an individual who had not yet begun taking RMDs, the 10-Year Rule still applies.

Review your education savings plans

Given the cost of education, you may have opened a 529 savings plan for your child when they were born. If you haven't already, it's not too late. The 529 savings plan could be a great tool when you are saving for a child's schooling. There are many types available, including 529 plans that will fund K-12 education, college, and graduate school. As a parent, you have ownership of the account and can name your child as the beneficiary. Verify with your plan administrator for specific guidance on contribution limits. Generally, if your contributions for the year are less than the gift tax exclusion ($17,000 in 2023) there is no need to report the contribution as a gift on your taxes.

Review estate plans

You should review your estate plan on an ongoing basis, including any living trust, will, or power of attorney. Have you undergone any major life changes over the past year that require changes in beneficiary designations? Check trust funding, review trustee and agent appointments, and go over any health care directives you may have along with powers of attorney in the rare case that you become incapacitated. Make sure you fully understand what each of the documents means.

Review your planned contributions for open enrollment, and max out your current 401(k) retirement contribution

If you are a W-2 employee with a 401(k) plan, you could be contributing the maximum amount allowed annually. That maximum contribution amount in 2023 is $22,500. If you've met that amount; great. If not, find out if you can add your year-end bonus check to your 401(k) or adjust your contribution to help meet that maximum. You won't have to pay taxes on the contributions - until you withdraw the money in retirement. If you are over 50, you're allowed to put in an additional $7,500 in catch-up contributions. Talk to your financial advisor about how you can do so.

You can start thinking about your 2024 contributions plan now. The max 401(k) contribution amount allowed for 2024 is $23,000.

Don't forget to use any Flexible Spending Account funds

If you haven't used up the funds in your existing FSA, now is the time. Most employers do not offer grace or carryover periods from one year to the next, consult your benefits administrator to learn more. Carefully review your eligible out-of-pocket expenses for the year. If there are any eligible expenses you have not yet claimed, you should file for reimbursement from your FSA. If there are permitted medical expenses you can take on prior to the end of the year, book an appointment now.

Review your tax withholdings

The IRS now has an online Tax Withholding Estimator that can help almost anyone try and predict what their tax bill may be. Are you an employee who might need to make an adjustment to the amount of money withheld from your paycheck based on contribution modifications? If you are a business owner or self-employed, this is one way to try and estimate quarterly tax payments and plan ahead.

Reach out to your financial advisor

If it's been a while since you've had a touch-base with your financial advisor, today is a great day to pick up the phone and give them a call. Ask them: in addition to this list, what do they see as the most pressing financial tasks to knock out as the year draws to a close? Schedule a meeting and get moving on your financial planning for the end of the year and beyond.

Looking for a financial advisor? We can help with that, too. Click here to find a B. Riley Wealth financial advisor located near you.

Securities and variable insurance products offered through B. Riley Wealth Management, Inc., member FINRA/SIPC. Fee-based advisory services offered through B. Riley Wealth Advisors, Inc. Fixed insurance products offered through B. Riley Wealth Insurance. Tax and accounting services offered through B. Riley Wealth Tax Services.