SAM's 2024 Year-End Checklist
As we continue the journey towards the year’s end, we are pleased to present this checklist to help give a boost to your financial future. Small steps here and there can add up over time and this list serves as a good end-of-year reminder for some important topics.
We’re here to guide and assist you as you navigate through these financial decisions. You may also wish to seek the support of an expert in these areas, such as a CPA or Estate Attorney to fully evaluate your options.
Satisfy 2024 Required Minimum Distributions (RMD):
If you were born in 1950 or earlier, you will likely need to process your RMD by 12/31 to avoid IRS penalties. Review your options below.
Consider consolidating your financial accounts:
If you have multiple accounts with the same registrations consolidating those accounts may simplify tax filing in the future.
Review your Estate Plan:
If there’s been a marital change or it’s been longer than five years since your last review contact your attorney for a check up if you’ve never created an estate plan now is a good time to start
Analyze your insurance coverage:
Due to recent inflation be sure to review your life insurance death benefits and primary residence replacement value
Strategically save more:
There’s still time to increase your 401K or HSA contributions before the end of the year to maximize your savings rate and defer taxes
Open Enrollments:
If you are covered by employer benefits be sure to review your current options to see if there’s a better choice for next year
Health Care Insurance:
If you have already reached your plan’s annual deductible it would be best to squeeze in any elective medical visits before the end of the year to maximize your benefits.
Preview of the Checklist:
Tax Planning
Consider a Roth IRA Conversion:
This strategy could help you diversify your retirement nest egg from tax perspective it could also potentially reduce taxes for you or your heirs.
Review last year’s tax return:
Reviewing your tax return could help you identify any year end considerations you can now to reduce your tax liability later
Invest in energy efficient home upgrades:
Up to 30% tax credit is available; common upgrades may include new doors, and windows, smart thermostats, heating and cooling systems and installing solar panels.
Consider harvesting investment losses:
Proactively realized losses in your investments by using tax loss harvesting techniques use these losses to offset capital gains or up to $3,000 of ordinary income realized losses can be carried forward to a future tax year
Gift up to $18,000 tax-free:
Consider gifting appreciated stock to a family member in a lower tax bracket rather than writing him or her a check. For 2, $18,000 per person can be gifted tax free for a married couple these double to $36,000 per recipient.
Consider Charitable Giving Strategies:
If you are charity inclined there may be donation strategies available to maximize your tax deduction
Expect Big Changes to Your Taxable Income?
If your taxable income is expected to be considerably higher or lower next year, there could be tax strategies worth exploring.
Changes Going into Effect 1/1/2025
Social Security Benefits:
Expect an increase of 2.5% of Social Security Benefits in January 2025. CPI-W, report shows a 2.2% increase in average prices over the last 12 months, down from 2.4% in August, indicating that inflation continues to fall.
529 Rollover to Roth IRA:
529 account holders will now be able to transfer up to a lifetime limit of $35,000 to a Roth IRA the Roth IRA must be for the beneficiary child and annual contribution limits will apply
401k contribution limits are increasing:
The annual 401K contribution limits are projected to rise by $500 to $23,500 in 2025. Over age 50 participants can contribute an extra $7,500 for a total of $31,000 . For individuals aged 60 to 63: There is a “super” catch-up contribution of up to $11,250, as introduced by the SECURE 2.0 Act.
2024 Required Minimum Distribution (RMD)
If you don’t need your RMD for spending, be strategic about your options:
Option 1: Preserve & Earn
Deposit your RMD into a high yield cash account or SAM’s laddered T-Bill Treasury strategy if you wish to preserve capital and generate some income. The amount distributed from your IRA will be taxable.
Option 2: Harness Compounding Growth
Reinvest your RMD into a longer-term investment strategy to leverage the power of compounding growth the amount distributed from your IRA will be taxable.
Option 3: Charitable Giving with Tax Benefits
Consider a Qualified Charitable Distribution (QCD) to a qualified charitable organization. The portion of your RMD that you donate directly from your IRA may be excluded from taxable income. For 2024, the annual QCD limit is $105,000 and will be adjusted for inflation starting in 2025.
Option 4: Invest in Education
Direct your RMD towards funding a tax deferred 529 college savings plan for a child or grandchild. While your RMD remains fully taxable the contributions made to a 529 plan will grow tax free. Additionally any withdrawals from the 529 and are tax-free if you utilize for qualifying educational expenses.
