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2021 Year-End Financial Checklist

Temperatures are dropping and honey hams are flying off the shelves while holiday decorations are popping up left and right. The end of the year always seems to come and go and before we know it, we’ll be setting our New Year’s resolutions for 2022. For many, these resolutions may be geared towards setting financial goals or getting personal finances in order. I encourage people to take action sooner rather than later because there are steps they can take before year-end to put themselves in a better financial position. I made a list (and checked it twice) of items to consider before year-end, depending on your situation. Talk to your advisor about which strategies may be appropriate for you and your family.

Cash Flow Planning

  1. Review year-end credit card and bank statements to wrap your head around annual spending and use that as a blueprint for building a budget.
  2. Pay student loans —The federal student loan payment pause is scheduled to end 1/31/22. Borrowers should be prepared to start making those payments again if they have not been doing so throughout the pandemic.

Retirement Planning

  1. Adjust current retirement plan contribution rates to maximize 2021 contributions. Remember, this may take a pay cycle or two before seeing those contribution amounts update.
  2. Plan tax strategy for 2022 — The IRS recently announced their 2022 inflation adjustments for various tax provisions, including retirement plan contributions. Think ahead and determine what your contribution rate should be in 2022 to maximize contributions.
  3. Complete 2021 IRA or Roth IRA contributions. You have until you file your 2021 taxes to complete this contribution, but if you have cash on hand now, there may not be reason to wait.

Tax Planning

  1. Keep an eye on the progression of the Build Back Better plan. Its passing may lead to additional tax planning strategies to consider before year-end. 
  2. Look for tax-loss harvesting opportunities in your portfolio to help offset gains that have been realized in 2021.
  3. Accelerate income into 2021 if you expect 2022 to be a particularly large income year for your family.

Legacy & Insurance Planning

  1. Make annual exclusion gifts to family members. In 2021, you can gift any individual up to $15,000 without the need to file a gift tax return.  By completing annual exclusion gifts, you can reduce your estate over time and help family members to the extent you’d like to. In 2022, the annual exclusion amount is set to increase to $16,000 per individual.
  2. Fund 529 college savings plans for children or grandchildren. You can do so using your annual exclusion amounts, or you can potentially take advantage of a rule that allows you to “frontload” 529 plans with up to five years’ worth of annual gifts.
  3. Meet with a trusts & estates attorney to get your basic estate planning documents in place. These can include wills, healthcare directives, powers of attorney, and other documents that should help protect your assets and family in the event of death.
  4. Ask your advisor to run an insurance needs analysis to determine whether or not your current life and disability coverage are sufficient. Review property and casualty/umbrella coverage as well.

Charitable Planning

  1. Make charitable gifts to support organizations that reflect your values and potentially receive tax deductions. Talk to your advisors and/or accountant about the most appropriate method for you (Donor Advised Fund, Qualified Charitable Distributions, Charitable Trusts, etc.).
  2. Use the holidays to have conversations with family members about values and establishing a “family mission.”

For those not working with an advisor, it’s never too late to start!

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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