Year-end financial checklist

• The end of the year is an opportune time to review your portfolio and add to investments in tax-advantaged accounts.
• Understand the different deadlines and contribution limits for 401(k) plans, IRAs and Health Savings Accounts (HSAs).
• You can’t control the market, but you can control how you manage the risk you take in your portfolios.

The holidays are a time many of us spend traveling, cooking, shopping, giving, and gathering with friends and family. The end of the year is also a time to take stock of how you’re tracking to meet your financial goals.

To help get you started, here is a year-end checklist of actions you can take — and concepts to consider — to help you pursue your financial goals.

When it comes to investing, what really matters are after-tax returns, so it’s critical to stay focused on minimizing your tax burden. For most, the best way to do that is to maximize investments in tax-advantaged accounts, like a 401(k) or Individual Retirement Account (IRA). (Read more about How asset location can help minimize taxes and maximize returns.)

Here are some important deadlines to remember:

• Deadline to contribute to 401(K): Dec. 31, 2023
• Deadline to contribute to IRA and Health Savings Account (HSA): April 15, 2024 (Read more about contribution limits and planning for retirement if you’re self-employed.)

Remember, it’s not what you earn but what you keep that really matters. So any additional money you can put in your investment accounts or save on taxes will benefit from compounding and potentially help you reach your financial goals. (Read more about How are ETFs tax efficient?).

And don’t forget other tax-advantaged vehicles such as flexible savings accounts and commuter benefits: Now is the time to “use it or lose it.”

Separately, consider tax loss harvesting, which is the act of selling an investment below its purchase price to realize a loss in a taxable account. (Gains and losses are based on the investment’s price return, not its total return.)

Losses harvested before Dec. 31, 2023 can be used, dollar for dollar, to offset realized capital gains for 2023 taxes — and beyond. Investors can also offset up to $3,000 per year of regular income with realized losses.¹

Be aware that the IRS precludes investors from recognizing losses and then quickly buying back their original investment. These “wash sale” restrictions mandate that an investor cannot realize a loss on the sale of an investment and then buy a “substantially identical” security, beginning 30 days before and ending 30 days after a security sale.

While you cannot control market sentiment or movement, you can manage the risk you take in your portfolios.

Here are three ideas to consider:

• Rebalancing: Whether annually or more frequently, it’s prudent to periodically rebalance your portfolio to prevent one asset, or asset class, from getting out of line with your intended targets. Rebalancing helps you stay on track by aligning your portfolio with your risk tolerance.
• Diversification: While the S&P 500 is up 21% this year, only 59% of individual stocks in the index have risen in 2023.² Successfully picking individual stocks and timing the market – buying and selling at just the right time – are difficult for even the most experienced investor. Diversification helps investors navigate fast-changing markets and stay the course to pursue their financial goals.
• Putting your Required Minimum Distribution (RMD to work): You are generally required to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement account when you reach age 72. Given the high interest rate environment, investors interested in putting idle cash to work have several options.

This is the time of year when it is easy to let spending get the best of us, but don’t lose sight of your long-term financial goals. Retirement is one of the biggest financial obligations we will all face and the best time to start preparing is now.