Financial planning is a year-round discipline, but the calendar is not neutral: a surprising number of opportunities expire on December 31. A structured year-end review helps the items with hard deadlines get attention while there is still time to act. Deadlines and limits can change from year to year, so confirm current figures with your advisor or tax professional.
Retirement accounts
- Confirm you are on track to contribute what you intend to workplace retirement plans; most employee deferrals must be made through year-end payroll.
- If you are of required minimum distribution (RMD) age, or hold certain inherited retirement accounts, verify RMDs are completed before December 31 to avoid penalties.
- Evaluate whether a Roth conversion makes sense this year; conversions are generally due by December 31, and the analysis depends on your current versus expected future tax brackets.
Taxes and investments
- Review taxable accounts for tax-loss harvesting opportunities, being mindful of the wash-sale rule.
- Check that withholding and estimated payments align with what you are likely to owe, especially after equity compensation events, a business sale, or unusual income.
- Rebalance portfolios that have drifted from their targets, coordinating trades with tax considerations.
Giving and family
- Complete charitable gifts by December 31 to count for the current tax year; donating appreciated securities or using a donor-advised fund can add tax efficiency.
- If you are over age 70½, consider whether a qualified charitable distribution (QCD) from an IRA fits your giving plan.
- Review annual gift tax exclusion gifts to family members if lifetime wealth transfer is a goal.
- Confirm you have used flexible spending account (FSA) balances subject to forfeiture.
Housekeeping
- Review beneficiary designations on retirement accounts and insurance policies.
- Revisit insurance coverage against any life changes this year.
- Set the first planning conversation of the new year while the review is fresh.
The bottom line
None of these items is complicated in isolation; the risk is simply that busy Decembers let deadlines slip. An hour of structured review, ideally with your advisor and tax professional, is usually enough to catch what matters.
Important disclosures
This article is provided for educational and informational purposes only and should not be construed as personalized investment, tax, or legal advice. The information presented is general in nature and may not be appropriate for your individual circumstances. Litchfield Financial, LLC does not provide tax or legal advice; please consult a qualified tax professional or attorney regarding your specific situation. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. No strategy, including diversification or asset allocation, assures a profit or protects against loss in declining markets.
Litchfield Financial, LLC provides investment advisory services through Claro Advisors Inc. (“Claro”), a registered investment advisor. Claro Advisors Inc. is a Registered Investment Advisor with the U.S. Securities and Exchange Commission (“SEC”) based in the Commonwealth of Massachusetts. Registration of an Investment Advisor does not imply any specific level of skill or training. Information contained herein is for educational purposes only and is not to be considered investment advice.
