I know what you’re thinking – who has time during the holiday season to think about financial planning when you already have a long list of “to dos” like gifts to buy, cookies to bake, elaborate meals to cook, decorating, and on and on? But the end of the year is one of the most important times to carve out just a few hours to make sure you’re set up for success and ready for the New Year.

Here are 6 tips to maximize your savings, minimize taxes, and reach your financial goals.

1. Max out your retirement contribution, if possible. You have until December 31, 2023, to contribute to your employer plan or April 2024 to contribute to your traditional or Roth IRA.

Some of these contributions may also help your tax situation. Traditional employer-plan contributions generally come out of your pay on a pre-tax basis, which automatically reduces your taxable income. But IRA contributions work a little differently. While Roth IRA contributions are never tax-deductible, traditional IRA deductions vary based on your modified adjusted gross income and whether you’re covered by a retirement plan at work.

2. Remember your Required Minimum Distributions (RMDs). These are the minimum amounts you must withdraw from your retirement accounts before the end of the year. You generally must start taking withdrawals from your traditional IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts when you reach age 72.

Account owners in a workplace retirement plan (for example, 401(k) or profit-sharing plan) can delay taking their RMDs until the year they retire unless they’re a 5% owner of the business sponsoring the plan.

3. Look at your 529 Education Plans. You have until December 31^st to contribute to your 529 account to qualify for a tax deduction. 529 plans are a great way to give the gift of education while reaping some tax benefits too.

In 2023, individuals can gift up to $17,000 in a single 529 plan without those funds counting against the lifetime gift tax exemption amount.

4. Make a charitable contribution. We talked about this in a recent blog post. Read the blog here.
5. Review your life insurance. You’ve worked hard so it’s important to evaluate your insurance to make sure you have the right amount and type of insurance to protect your financial situation in unforeseen circumstances. Reach out to your insurance agent to start the discussion.
6. Final financial tips:

• Review and update your account beneficiaries, if needed.
• If you’ve moved, make sure your address is updated with all your business/account relationships.
• Check your Flexible Spending Account. Some don’t allow you to rollover funds into the new year so, if that’s the case, you need to spend it now or lose it.
• Review your employee benefits to see if you need to make any adjustments at the next open enrollment.
• Set goals for 2024. Maybe you’re thinking about a dream vacation or you’re planning to buy a house or new vehicle. It’s important to set up a savings plan to help you achieve your goals.

Members Trust is ready to help. Contact us with questions.