As we look ahead to the last quarter of 2023, it may feel as though 2024 is still in the very distant future. However, as we all know, time has a funny way of sneaking up on us. Before we know it, kids will be trick-or-treating, there will be turkeys and pumpkin pies going into ovens and holiday lights will begin lining the streets as shorter, cooler days settle in. The next months should be spent relaxing and enjoying time with family and friends, but too often they become stressful, worrying about what should be done before year-end. To stave off these concerns, here are a few tasks that you can check off your list now. These are the to-do’s that would perhaps wake you up in the middle of a December night, but with a little consideration in September, will allow you to sleep with ease.
If possible, it’s a great idea to max out your retirement contributions and now is the perfect time to ensure you are on track to do so before year-end. If your employer offers a 401(k) or 403(b), you can contribute up to $22,500 and an additional $7,500 if you are age 50 or older. Traditional and Roth IRAs cap the contribution at $6,500 with a catch-up of $1,000 for those 50+.
If you want to convert all or some of a traditional IRA to a Roth IRA before the end of the year, the sooner the better to put the plan in place. Converting traditional assets to Roth has numerous advantages such as allowing for increased tax-free growth over a longer period, reducing future taxes, and potentially leaving behind a tax-advantaged inheritance for heirs. However, Roth conversions aren’t always appropriate, so it is important to reach out to your financial planner and tax professionals to determine if it’s a strategy to consider. Becker’s Wealth Planning team proactively looks for these opportunities for our clients, so if it’s a possible strategy for your situation you’re likely already having those conversations.
Do you already know that you will be giving to a charity before the year ends? Now is the perfect time to strategize and ensure that you will do so in the most impactful and beneficial way. You might have appreciated non-cash assets in your portfolio to donate, allowing you to eliminate a potential capital gain tax in the future. If you are 70 ½ or older with IRA assets, a qualified charitable distribution could be a good option that will also lower your current or future income taxes. Additionally, if you have loved ones that you would like to make a gift to, the 2023 annual exclusion per recipient is $17,000.
Max Out Medical Deductible
If you are getting close to using your entire 2023 deductible, or perhaps even the out-of-pocket limit, now is a great time to get some of those appointments scheduled that you have been putting off. It’s never a bad idea to get an annual physical. Call the dermatologist about that rash that seems to come and go. Refill your prescriptions. Do you have a need to see a physical therapist? Is there any imaging or lab work that you have been putting off? Now is the time to make the most of potential increased medical coverage.
Review Insurance Needs and Tax Withholding
Did any family changes occur this year, such as marriage, divorce or the addition of a new dependent? Ensuring that you and your family have appropriate coverage and are set up accurately for the current and upcoming tax year is an important to-do as we enter the fourth quarter. In addition to health coverage, it’s also a great time to review your home, umbrella, auto and life insurance policies. As we go about our day-to-day, it is easy to find ourselves under-covered with possible home expansions, family additions or other major life events. Your Becker team is happy to review your coverage together and, if necessary, work with outside professionals to confirm you are adequately covered.
Review Estate Documents and Beneficiaries
If one thing is certain, it’s that life is uncertain. No one wants to leave behind a headache for their family and loved ones, so it is crucial to have estate documents set up in a way that won’t make a difficult time more challenging. It’s also important to double check the beneficiaries listed on retirement accounts and make sure the person or Trust listed is correct. If you had a life changing event this year, you may need to update your beneficiaries. Doing a quick check-up of everything will allow you to finish out the year worry-free.
If any of these topics piqued your interest, or you need assistance navigating any of these areas, please contact your Becker team. We would love to chat and help set you up for a successful rest of 2023!