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Ann Herrero

End of Year Checklist

Updated: Nov 28

The end-of-the-year financial planning checklist is a crucial exercise, as it allows you to do a comprehensive review of your financial health and sets the stage for you to be able to meet your financial goals for the coming year. While specific strategies may vary based on individual circumstances, several general approaches are commonly recommended by financial advisors. Note that the strategies discussed here are for general informational purposes only. To complete your individual year-end checklist, consult your qualified financial advisor.



Tax Planning


  • Retirement Plan Contributions: To reduce your taxable income, make sure you’re contributing the maximum allowable amount to your tax-advantaged retirement account, such as a 401k, 403b, traditional IRA, Roth IRA, or SEP IRA in the US or a UK, or EU Pension scheme and other individual retirement plans available to you in your country of residence.


  • For 401ks, 403bs, and other US company-sponsored plans, you can make employee contributions in 2024 of up to $23,000 if you are under age 50 with a catchup contribution of $7,500 if you are over 50.  This does not include any company-paid contributions like profit sharing or matching contributions.  All employee contributions must be made by the calendar year-end of December 31, 2024.


  • Make the most of all your company-matching contributions. Be sure to understand the benefits that your company is providing you, including matching contributions to your company-sponsored plan. Employers around the world are increasing their benefits packages, so be sure you take advantage of all your benefits as an employee.


  • For IRA contributions, you have more time.  To qualify to make an IRA contribution, you must have US-earned income.  For expats, this usually means you have to use the FTC (Foreign Tax Credit) rather than the FEIE (Foreign Earned Income Exclusion) on your US tax return. Consult your tax advisor.  You can contribute up to $7,000 ($8,000 if over 50) for 2024 until the US tax deadline of April 15th, 2025, to a traditional or Roth IRA.  Both have some income limitations.  If you are single and make over $146,000 or married and have income over $203,000, you cannot contribute to a Roth.  There are some ways to avoid these limitations, including contributing to a Roth 401k or doing a back-door Roth IRA, so consult your financial advisor.  For US expats, you have an additional two-month automatic extension on your tax filing until June 15, 2024, but your qualifying IRA contributions must be made by April 15.


  • SEP IRAs are designed to allow self-employed individuals a larger contribution limit. If you are a self-employed contractor with no employees, you can contribute up to 25% of your income to a SEP IRA, up to a maximum of $69,000. The deadline for contributions is April 15, 2025.


  • ISA contributions in the UK can be made by the UK year-end, April 5.  You can contribute $20,000 to your ISA account and $9,000 to a Junior ISA.  UK residents are not taxed on this investment.  US expats will owe US capital gains taxes to the IRS on their ISA, but now that the US Capital Gains tax is lower than the UK tax, it might be a worthwhile investment if you intend to stay in the UK.  Just be aware that as a US taxpayer, your investment options in an ISA are limited to shares or bonds, which may limit your ability to diversify your portfolio.

 

  • Roth Conversions must also be done by the calendar year-end - December 31, 2024.  By late November, you should be able to estimate your income for the year.  Generally speaking, you should consider filling up your tax bracket with a Roth conversion, especially if you are in a lower bracket this year.  You will need to pay taxes on the conversion with outside sources, so be sure you have the necessary payment ready for the IRS when you file your US taxes in April.


  • Required Minimum Distributions (RMDs): If you’re at retirement age and have Traditional IRA or 401(k) assets, you must take a distribution by year-end of December 31, 2024, if you are over age 73.  One exception is if you are still working at the company that sponsors the 401k retirement account, you do not have to take distributions until you fully retire from the company. Otherwise, you will want to take the full amount of your distribution at the end of the year.


  • Charitable Contributions: Consider making charitable donations to offset taxable income. Ensure that these are made within the tax year to qualify for deductions.


    • Consider setting up a Donor-Advised Fund (DAF) for an immediate tax deduction while being able to recommend grants from the fund in the future. A DAF can contribute to an international charity if properly vetted.


    • You can also avoid paying taxes on your RMDs by using the Qualified Charitable Distribution (QCD), which allows you to send your RMD directly to the charity and avoid paying US income taxes on the distribution.  You can do a QCD if you have attained the age of 70 ½.



Investment Review


  • Tax Harvesting: Selling off investments at a loss to help offset capital gains in the current year is a good strategy to reduce your tax liability for 2024.  Assets with unrealized gains and unrealized losses can be sold in the same year so that realized gains offset the losses and the current tax liability is reduced. The wash sale rule prevents investors from deducting capital losses if they buy back a similar security within 30 days of selling it at a loss. The rule applies to stocks, bonds, options, ETFs, mutual funds, and options and futures contracts on those investments.  Consult your financial advisor to avoid a wash sale.  Individuals who pay taxes in multiple jurisdictions should be aware of which country is taxing which asset so that this strategy can be fully utilized.


  • Review Asset Allocation: The end of the year is a good time to review your asset allocation to ensure that it aligns with your financial objectives.  You should strive to rebalance your asset allocation annually or semi-annually in volatile markets. 



Budget and Debt Management


  • Budgeting for 2025: Update your balance sheet


    • Arrange assets in order of liquidity.  Assets - Liabilities (Debts) = Net Worth.


    • Funds in home currency as well as USD and any other relevant currencies should be listed on the balance sheet for reference.  The exchange rate should be updated regularly.


    • Be sure to also prepare a list of account numbers and passwords that you keep in a safe place so you can access these funds should you need them.  This information should also be shared with your trusted power of attorney if they need to access your funds in the event of your incapacity.


  • Emergency Fund: Make sure you have adequate emergency savings in case you need to access funds quickly without disturbing your long-term asset allocation. You will usually want to keep equivalent to 3-6 months of living expenses in a high-yield savings account or other liquid savings vehicle.


  • Debt Repayment: Evaluate your debts and consider paying off high-interest loans and credit cards to save on interest expenses.  Make a plan to continue to pay off your debts in the new year.  Be aware of which liability is in which currency to mitigate your currency risk.  Your loan can become more expensive if you are on the wrong side of the currency conversion.


  • Credit Check: Check your US credit score to ensure no one is accessing your information.  You can use free online resources to monitor your score, though you may need to use a Virtual Private Network (VPN) to access them from abroad.  If you have a US bank account, many have free online access to one of your credit scores. There are three separate companies that calculate your score, each slightly differently.  You can access a free annual report at www.annualcreditreport.com.



Estate Planning


  • Update Will and Trusts: Ensure that your will and any trusts are current and reflect your wishes.  If you are a US expat, be sure you have consulted with a local attorney or Notaire to ensure you are protected by a country-specific in-situs will in the proper language to guide local officials and tax authorities.  You also need a local power of attorney and health care proxy in place to cover your needs should you become incapacitated.


  • Beneficiary Designations: Review and update beneficiary designations on insurance policies, retirement accounts, and other financial assets. If any account has a beneficiary designation, the account passes directly to your heirs and does not go through your will to pass down to your heirs through probate.


  • Personal Gifting: if you have funds to gift to a friend or relative, most countries have an allowance that expires at the end of the calendar year.  In the US, your annual gift exclusion is $18,000 in 2024.  Make use of the Donor Advised Funds and Qualified Charitable Contributions mentioned above if you are gifting to charities.



Miscellaneous


  • Review Insurance Coverage: Make sure that your various insurance policies (health, life, property, etc.) are up-to-date and offer adequate coverage.


  • Financial Goals: Set financial goals for the next year and allocate resources accordingly.


In summary, end-of-the-year financial planning is a very useful and important exercise in making sure you’re managing your assets effectively while staying on track to meet your financial goals.



DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

 

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