Financial Moves To Make Before Year End

As the end of the year approaches and the exciting frenzy of the holiday season commences, don’t forget to set aside some time to review these financial moves you should make before the end of 2016.

For the most recent contribution limits, gifting thresholds, and RMD rules, please refer to

1) Deplete your FSA:  If you have been depositing pre-tax funds to a Medical or Dependent Care Flexible Savings (FSA), you should aim to spend down your account before you lose it.  Although some plans allow you to retroactively charge to your FSA through March 15 of the following year, it would be wise to not wait until the very end.  Some ideas for spending include needed dental work, stocking up on certain over-the-counter medicines, updating your first aid kit, or a new pair of glasses. Or you may consider using the funds for qualified childcare expenses for children under 13.

2) Maximize your HSA:  You should aim to maximize the amount you put annually into your Healthcare Savings Account (HSA).  As HSA funds do not go away at year-end, failure to maximize contributions means setting aside fewer possible tax-free dollars for future medical expenses.

3) Max out 401K contribution:  Ensure if possible that you contribute the maximum amount allowed to your 401K ($18,000 plus $6,000 catch-up for those 50 or older).  Also, seek to contribute at least the amount of your company’s match as these are essentially free dollars.

4) Required Minimum Distribution:  If you have an IRA and are over 70 ½ or you have an inherited IRA, don’t forget to take your Required Minimum Distribution.

5) Gifting:  You may give each individual up to $14,000 annually under the annual gift tax exclusion (meaning you won’t need to pay taxes on the gifts).  You might want to consider contributing to grandchildren’s 529 plans.

6) Charitable Contributions:  Charitable contributions should be made by year-end to impact current year taxes.  Be sure to keep all receipts.  You may use appreciated securities you have held for more than a year rather than cash to fund the contribution.  Or use credit cards to have records of the transactions, ensuring contributions can be deducted in the current year. If you are over 70 ½, you may consider making a Qualified Charitable Distribution (QCD), allowing you to give up to $100K of your annual Required Minimum Distribution to qualified charities.  You don’t get the itemized deduction for the gift, but the charitable distribution amount is excluded from taxable income and could help lower reported income for future Medicare Part B premium purposes.

If you have further questions, please reach out to a Wingate Wealth Advisors advisor who would be more than happy to help!

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