The end of the year is coming up, and with it comes a long list of to-dos. Get a jump on your money preparations now and you’ll set yourself up for a smoother fourth quarter:
Max Out Retirement Accounts
If you have a 401(k), you have until the end of this calendar year to make your contributions. Make plans now to max out that account if you haven’t already. If you have an individual retirement account (IRA), you have until you file your tax return in the spring to contribute to that account.
Contribution limits for 2017 are $18,000 for a 401(k) and $5,500 for an IRA.
If you’re a freelancer or consultant, you can also set up a simplified employee pension individual retirement arrangement (SEP IRA) by the end of the year. Set that up now so your contributions can apply for this tax year.
Finally, this is also the best time to do a Roth conversion. The benefit of a Roth IRA versus a traditional IRA is that with a Roth, you don’t have to pay income tax when you withdraw funds for retirement. If you had a traditional IRA and want to convert it to a Roth IRA, you have until December 31st to do so.
Take Advantage of Open Enrollment
Open enrollment season typically kicks off in November, but it can be earlier for some companies. It’s a good idea to take some time each fall to check over your benefits, particularly insurance, and make sure your needs are still being met. If you got married or had a child, verify that your insurance reflects that.
Your company may have active enrollment, where you’re required to choose your benefits for the upcoming year, or passive enrollment, where you can continue with last year’s selections. If your company takes the passive approach, you should still get whatever information you can to check up on your coverage. You want to be well informed when it comes to your insurance and what’s covered.
You might also be weighing whether to open a health savings account (HSA) or flexible spending account (FSA.) The main difference between these options is that an HSA rolls over to the next year, but the funds in an FSA expire at the end of the year.
Adjust your tax withholdings
Your life changes from year to year. Ensure that your tax withholdings reflect those changes. There are major changes, like the birth of a child or starting a business, but there are lesser-known changes to take note of as well. Here are five of the main reasons to update your withholding:
- Marriage or divorce
- Birth or adoption of a child
- Taking on a second job
- Spouse gets a job or changes jobs
- Unemployment for part of the year
Review Estate Plans
Your estate plan includes your living trust, will, health care power of attorney and beneficiaries. Focus especially on checking your beneficiaries if you’ve been through major life changes (like a divorce.)
It’s important to check on that once a year, so this is a great time to make sure that’s squared away before going into the new year.