Vail Daily column: Check out this year-end financial checklist
As this year draws to a close, you may want to look back on the progress you’ve made this past year in various areas of your life — and that certainly includes progress toward your financial goals. At the same time, you may want to make some end-of-year moves that can close out this year on a positive note while paving the way for a productive 2015.
Here are a few such moves to consider:
• Boost your retirement plan contributions. This actually isn’t an end-of-year move because you have until April 15 to contribute to your Roth or traditional IRA for this tax year. Nonetheless, the sooner you get extra dollars working for you in your IRA, the better. You can put in up to $5,500 to your IRA (or $6,500 if you’re 50 or older) for this year. If you are self-employed or run a small business, then you also have until April 15 to contribute to a retirement account, such as a SEP IRA or a SIMPLE plan. In addition to helping you build resources for retirement, these types of plans can offer you some tax advantages — so if you haven’t established a retirement plan yet, then consult with your financial and tax professionals
• Sell your losers. If you own investments that have lost value since you purchased them, then you can sell them before this year ends and use the tax loss to offset some capital gains you may have earned in other investments. If you don’t have any capital gains, then you can use up to $3,000 of your tax losses to offset other ordinary income. And for a loss greater than $3,000, you can carry over the excess and deduct it from your taxes in future years. If you still liked the investment that you sold at a loss, and you want to keep it in your portfolio, then you could repurchase it, but you’ll have to wait 31 days to avoid violating the IRS’ wash-sale rules. Keep in mind that these suggestions only apply to investments held outside your employer-sponsored retirement account — you can’t take a tax deduction on capital losses in a 401(k) or similar plan.
• Evaluate your 401(k) investment mix. You may be able to adjust the investment mix in your 401(k) as often as you like. So when evaluating your 401(k), make sure your holdings aren’t concentrated in just a few investments, and try to determine if your portfolio is still appropriate for your risk tolerance — not too aggressive or too conservative. Also, if your plan offers a Roth option, then consider taking advantage of it — with a Roth, you won’t be able to deduct your 401(k) contributions from your taxes, but once you retire you won’t be taxed on your withdrawals.
• Review your insurance coverage. If you’ve experienced any changes in your life in this year — new spouse, new child, divorce, new job, etc. — then you may need to review your life insurance coverage to make sure that it’s still sufficient for your needs and that you have the correct beneficiaries in place.
By making these and other moves, you can say a fond farewell to this year, knowing that you’ve done what you could to help bolster your financial position for 2015 and beyond.
This article was written by Edward Jones for use by your local Edward Jones financial adviser. Edward Jones and its associates and financial advisers do not provide tax or legal advice. Tina DeWitt, Cassie Alimonos, Charlie Wick, Kevin Brubeck, Dolly Schaub and Chris Murray are financial advisers with Edward Jones Investments. They can be reached in Edwards at 970-926-1728 or in Eagle at 970-328-4959 or 970-328-0361.