5 Financial Steps to Take Before Year-End

The holiday season offers no shortage of distractions. Busy families must juggle their usual responsibilities while finding time for shopping, parties and family commitments. With such a flurry of activity, finding time to think about finances can be a challenge.

Yet end of year is precisely the time of year when diligence can offer the most rewards.


  • Several key financial deadlines are on the horizon
  • By taking action now you can help manage your taxes and protect your family
  • Five recommendations are particularly actionable

Five steps to consider before year end

1. Monitor Flex Spending Accounts

Deadline: Varies by plan typically 12/31 or 3/15 
Flexible spending accounts are an employer benefit that can deliver tax-free medical, childcare and commuter expenses via salary deferral. Along with these benefits however, come some very specific deadlines.

  • Carefully review your flex spending account balances to ensure you won’t forfeit any balances. While many plans expire on December 31st, some allow spending until March 15th and others allow users to transfer up to $500 into next year. Your plan’s policy should be clearly spelled out in your plan documents
  • If you have unused healthcare balances, flu shots, eyeglasses or even a trip to the chiropractor can ensure you benefit from these pre-tax dollars
  • Consider the amount allocated last year for these accounts and adjust them for 2017

2. Review Health Savings Account (HSA) Contributions 
Deadline: Can vary by plan, for direct contributions (4/18)
Unlike a flexible spending accounts, HSAs allow owners to carry over unlimited balances year over year and invest them for future healthcare expenses. This can be an effective strategy to help build reserves for retirement.

  • If you qualify for and participate in an HSA, consider maximizing your contributions
  • The aggregate (employer and employee) contribution limit for 2016 is $3,350 (Single) and $6,750 (Married Filing Jointly)
  • A catch-up contribution of $1,000 may be allowed for those 55 or older

3. Double Check Required Minimum Distributions (RMDs)
Deadline: 12/31 for those currently taking distributions, 4/1 for first timers

If you are over 70 ½ you are likely taking RMDs from qualified accounts. However, even a veteran of the process could benefit from a quick double-check of their numbers due to the stiff penalty assessed by the IRS on errors (50%).

Several common errors to avoid include:

  • A failure to include all employer-sponsored plans (profit sharing, 403b, IRAs etc,)
  • Basing RMDs on an incorrect balance for first year calculation (investors should use the December 31st balance of the year before the first RMD, even if the RMD is not taken that year)
  • Missed RMD deadlines (12/31 unless it is your first year, 4/1 for first-timers)
  • Confusion around rules while still working for the company who sponsors the plan (non-IRAs paid by current employer may be excluded in some cases)
  • Failure to account for inherited or beneficiary IRAs which are subject to the same requirements and penalties
  • Incorrect exclusion of inherited Roth IRAs

4. Take Your Losses
Deadline: 12/31

End of year may be a good time to take advantage of tax loss harvesting. With this strategy investors can leverage losses on specific securities to offset gains made elsewhere. In addition to offsetting gains, each year investors may also claim up to $3,000 in losses to offset ordinary taxable income.

  • If you have assets in your account that have declined in value, now may be the time to consider selling them to take advantage of this for tax year 2016.
  • Sales of assets need not negatively impact your asset allocation
  • Specific rules apply to this strategy, we would love to discuss if it may be right for you

5. Review Estate Planning Documents
Deadline: None

In a previous article, we discussed the importance of an estate plan as well as creating a digital asset inventory. While neither have a hard deadline at the end of year, reviewing both annually is a good best practice.

  • Review your documents and consider any changes that may affect your estate (births, deaths, divorces, new or recently sold assets etc.)
  • Consider amending documents that may be impacted
  • Discuss your plan with your family and ensure they know where key documents are located

Despite the busyness of the season, remember that setting yourself up for a successful 2017 actually begins in 2016. If you’d like to discuss any of the items listed above or consider additional strategies, we’d love to hear from you.  Contact Doug Doug.Weisenberger@northstarfinancial.com or Josh Josh.Evenson@northstarfinancial.com to set up a meeting today.

Doug Weisenberger

Author: Doug Weisenberger

Doug Weisenberger is a Senior Partner with North Star Resource Group in Madison, Wisconsin. For over 35 years he has helped families define and prioritize their goals for the future and then align their finances in support of them.

Registered Representative of Cetera Advisor Networks, LLC and Investment Advisor Representative of Cetera Investment Advisers, LLC.

This article was co-written by Douglas J. Weisenberger, CFP®, CLU, ChFC, CLTC & Joshua C. Evenson CFP®, ChFC, CASL, in collaboration with a professional third party.

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