As the year draws to a close, it’s easy to get caught up in the holiday hustle. However, these last few weeks of the year are also a valuable opportunity to ensure you’re on track with your financial goals. Taking the time to review key aspects of your wealth plan with your financial advisor can set you up for success in the upcoming year. Here’s a checklist to guide you through the essential areas to review before year-end.

1. Review Your Investment Portfolio

The end of the year is a great time to assess your investment portfolio, especially for opportunities like tax-loss harvesting. By strategically selling underperforming assets, you can offset capital gains in other areas of your portfolio, reducing your taxable income. Be mindful, though, of the IRS’s wash-sale rule, which disallows losses if you buy a substantially identical security within 30 days of the sale.

In addition to tax-loss harvesting, it’s also a good time to rebalance your portfolio. As markets fluctuate, your asset allocation may drift from its target. Rebalancing ensures that your investments remain aligned with your risk tolerance and financial objectives for the year ahead.

2. Maximize Your Tax Deductions

Maximizing your contributions to tax-deferred retirement accounts can significantly lower your taxable income. For 2024, you can contribute up to $23,000 to your 401(k), with an additional $7,500 catch-up contribution for those 50 or older. If you’re contributing to an IRA, the limit is $7,000, plus an additional $1,000 if you’re 50 or older. While 401(k) contributions must be made by December 31, 2024, you have until April 15, 2025, to contribute to your IRA for 2024.

Another option to consider before the year ends is converting a traditional IRA to a Roth IRA. Although Roth IRA conversions are taxable in the year they occur, they offer long-term benefits, such as tax-free withdrawals on both contributions and earnings. Speak with your advisor to determine if this strategy fits your financial goals.

Additionally, if you qualify, contributing to a Health Savings Account (HSA) can offer triple tax benefits: your contributions are tax-deductible, and both earnings and withdrawals for eligible medical expenses are tax-free. The contribution limit for 2024 is $4,150 for individuals covered by a high-deductible health plan (HDHP) and $8,300 for families.

3. Plan Your Charitable Contributions

Year-end is an ideal time to review your charitable giving strategy. If you plan to make donations, doing so before December 31 can maximize your deductions for the year. However, you can only deduct charitable gifts if your total deductions exceed the standard deduction threshold. For married couples, this threshold is $29,200 in 2024.

If you donate appreciated securities instead of cash, you can avoid paying capital gains taxes on the appreciation. However, this doesn’t apply to securities in qualified retirement accounts like IRAs. Another option is to set up a donor-advised fund (DAF), which allows you to take a deduction now and make charitable donations over time.

4. Review Your Estate Plan

It’s a good idea to revisit your estate planning documents regularly, especially after significant life events such as marriage, divorce, or the birth of a child. Your will, trust, and powers of attorney should reflect your current wishes and circumstances. It’s also essential to update your beneficiary designations to ensure they are current.

If you have a taxable estate, it’s crucial to review your estate tax and gifting strategy. In 2024, the lifetime gift and estate tax exemption is $13.61 million, increasing to $13.99 million in 2025. However, these exemptions could change or expire, and planning for such changes should be a priority. Consult your estate planning attorney soon, as many are expecting a rush of requests as the deadline approaches.

5. Assess Your Insurance Coverage

As your wealth grows, it’s important to review your insurance coverage to ensure it aligns with your current lifestyle and assets. An annual insurance review can help identify gaps in coverage and ensure that you have adequate protection for your wealth. This includes reviewing life, health, home, and auto insurance, as well as updating beneficiary designations where necessary. If you’re unsure whether your coverage is sufficient, consider reaching out to your advisor for guidance.

Conclusion

The end of the year is an opportune time to take a step back and evaluate your financial health. A comprehensive year-end review of your investment portfolio, tax strategy, charitable giving plans, estate plan, and insurance coverage can help you stay on track to meet your financial goals. Partnering with a knowledgeable wealth advisor during this process ensures that you make the most of the year-end opportunities available to you.