December 14, 2016

Your Year-End Financial Checklist

Hes Making His List-large


While Santa is checking his list to see who’s been naughty or nice, it might be a perfect time to make your own checklist:

As we approach the end of the year with all of the excitement it brings, it is the opportune time to review a number of aspects of your financial life. Now is the perfect time to do a complete financial physical exam so you can rest a little easier at night, enjoy the holiday season with your loved ones and start 2017 out with a bang! 

Tax Rates

Federal income tax rates remained unchanged for 2016. The seven marginal income tax rates are: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

Long-term capital gains rates also stayed the same: 0% for investors in the 10% and 15% income-tax brackets, 15% for investors in the 25%, 28%, 33%, and 35% tax brackets, and 20% for investors in the 39.6% tax bracket.

The 3.8% Medicare surtax still applies for 2016 on the lesser of net investment income or the excess of modified adjusted gross income (MAGI) above $200,000 for individuals, $250,000 for married filing jointly, or $125,000 for married filing separate. There is also the 0.9% Additional Medicare Tax on combined wages, compensation, and self-employment income that exceeds $200,000 for individuals, $250,000 for married filing jointly, or $125,000 for married filing separate.

Due to the potential for lower federal income tax rates and an overhaul of the Obamacare law under the new Trump Administration, it could turn out to be a good idea to defer current year income into 2017 where possible. We would encourage you to consult with your tax advisor to get their perspective and advice if you think this could apply to you.


Review your year-to-date retirement savings account balances, and if you can but have not yet done so, try to max out your contributions. Also consider maxing out catch-up contributions if you will turn age 50 by year-end.

The basic employee contribution limits for 401(k)s, 403(b)s, and 457 plans for 2016 are $18,000 for investors younger than age 50 and $24,000 for those 50-plus. The contribution limit to IRAs for 2016 for investors younger than age 50 is $5,500 and $6,500 for those over the age of 50.

Gifts and/or Contributions

Now is a good time to start to gather records and receipts of your charity donations. It is also a good to plan additional charitable contributions or contributions to education accounts (mentioned below), and make any desired cash gift to family member.   Review and fund trusts, as applicable.

In 2016, up to $14,000 in cash or securities can be given to any other individual free of federal gift tax; however, the gift must be completed by December 31st in order to count for the 2016 tax year.

College Savings

If your child, grandchild, or other family member has a 529 College Saving Plan you make contributions to, now would be a great time to add extra funds to the account (until you reach the max contribution limit of course).   529 plans are a fantastic way to put money away for a loved one’s future instead of Uncle Sam’s pocket.   Contribution limits for 529 College Saving Plans vary by individual state, and federal gift rules apply.

Accelerated Mortgage Payments

Make December the “13th month.” Can you make a January mortgage payment in December, or make a lump sum payment on your mortgage balance? If you have a fixed-rate mortgage, a lump sum payment can reduce the home loan amount and the total interest paid on the loan by that much more.


Are your policies and beneficiaries up to date? Review cost, beneficiaries, and any and all life changes that may affect your insurance needs.

Estate Planning

Take a moment to review the beneficiary designations for your IRAs, qualified plans and life insurance policies. It is with double-checking to make sure your assets will go where you want them to go should the unthinkable happen. Lastly, take a quick look at your will to see that it remains valid and up to date.


If you have not done so in the past 10-12 months, run a credit report to make sure there are no fraudulent charges out there. The best of the best of us procrastinate this one.

Think Proactively for 2017

Your withholding status – It may be time for a withholding adjustment if…


  • You tend to pay a great deal of income tax annually.
  • You tend to get a big refund each year from the IRS
  • You recently married or divorced.
  • You have a new job that pays you much more than your      old one
  • You opening up your own business or started      freelancing.

Your investment strategy – Make sure it’s in keeping with your current goals.  Look over your portfolio positions and revisit your asset allocation.

Goal setting – What are your business, financial or life priorities for 2017?  Try to specify goals you want to accomplish will make you happy. Think about the consistent investing, saving or budgeting methods you could use to realize them.

Birthday Milestones Reminders:

70 ½ - Must take Required Minimum Distributions (RMDs) from your IRA(s).

65 – Eligible to apply for Medicare.

62 – Eligible to apply for Social Security benefits.

59 ½ – May take IRA distribution without penalty

55 – May take distributions from 401(k) account without penalty if you retire

50 – “Catch up” contributions may now be made to IRAs (and certain qualified retirement plans)

What are some action steps I can take today?  Follow this checklist to make sure that you have maxed out all of the basics, searching for possible credits and/or deductions before the year comes to a close.  Then have a qualified tax professional put together a year-end projection, including Alternative Minimum Tax(AMT). Review appreciated property sales, both realized and unrealized losses and gains, and take a look back to see if there are any prior year loss carry-forwards.

Lastly, don’t delay – get it done.  Pick a date to have a meeting with yourself to knock out some of the items.  You’ll be surprised how much better you’ll be able to sleep at night….

Hopefully throughout our regularly scheduled update meetings, we have touched on these items with you.  If you feel like you would like to touch base on any of these things, reach out to us and we’ll schedule an in-person or phone meeting with you.