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5 Financial Moves to Make Before the End of the Year


5 Financial Moves to Make Before the End of the Year

December 31st will be here before you know it and now is the time to take a look at your finances so you will be ready for 2021.

Here are 5 financial moves to make before the end of the year.

#1: Check on your flexible spending account.

If there is money still in there, look at ways to spend it on medical expenses before the end of the year. If you don’t use, it you lose it. Although, some employers offer a 2 ½ month extension or a dollar amount to be carried over.

So, perhaps look at some ways you can use that money now such as dental care, routine doctor visits or go ahead and get a 3 month supply on your prescription drugs.

#2: Review your medical expenses, insurance plans, and premiums.

Speaking of medical expenses, open enrollment for health insurance plans is in full force both with employer plans and the market place. Health insurance coverage usually changes every year and it’s easy to overlook. So, shop around for the plan that best suits your needs. I know it’s easy to overlook and it may take some time to compare, but you don’t want to be surprised with higher co-pays, deductibles and premiums next year. You may even want to consider HSA eligible plans that could possibly save you in premiums.

#3: Consider a Roth conversion.

Everybody has been talking about Roth conversions this year and you may have had it in the back of your mind to explore this option. Well, time is running out so consider taking action. Remember, there are no income limits to convert your IRA to a Roth. This is known as the backdoor Roth conversion. You will pay tax on the amount you convert but distributions coming out are tax free. Also, with a possible new president next year, who knows what new tax policies will come down the pike? So, check with your tax professional to see what amount would make sense to convert.

#4: Don’t overdo the retail therapy.

The holidays are coming up and in a year like we’ve had in 2020 it can be tempting to have retail therapy and over do it with spending. Take some time to set some limits and stick with a budget (I know that sounds like a bad word). Don’t forget to utilize any cash back rewards you may have racked up and deploy that cash for your spending.

#5: Tax loss harvesting.

Okay, what is that? Tax loss harvesting is when you sell a security (stocks or perhaps mutual funds) at a loss to offset any gains you would have in other securities up to $3,000. Now this doesn’t work with IRA’s, only non-qualified accounts. Also, you have to consider the wash out rule where if you bought the same type of security within 30 days it negates the purpose. It takes purposeful planning and you need to avoid some common pitfalls so, check with your financial professional before implementing this strategy. However, it can be a great tool in reducing capital gains tax. I know that with my clients, I implement this strategy at this time of the year.

Now in a perfect world, you should be reviewing your finances throughout the year but sometimes, well, that just doesn’t happen. However, it’s not too late to review these financial items to get your finances in order before the end of the year.

Keith Wilson


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. Please seek a professional tax advisor.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

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