Year-End Financial Planning In 10 Steps

Year end checklist planning

The end of the year is an opportune time to wrap up loose ends, especially when it comes to your finances and investments. These 10 steps could help your long-term bottom line and, more importantly, give you peace of mind.

1. Update your goals

Your financial plan should align with your long-term objectives, so consider whether or not your goals have changed. Are you expecting a job shift in the coming year? A new addition to your household? Could medical expenses be in your future? Any lifestyle adjustment that could potentially change your financial outlook should be reflected in your portfolio strategy.

2. Review your money management

It’s important to figure out where your money went (and how much you saved) throughout the year. What you discover may be surprising. Your results can help you create a household budget for 2018 to better manage your spending and saving activity.

In 2016, 65 percent of household spending went toward services, including housing, healthcare and transportation. The remaining amount was divided between non-durable goods such as food and clothing (22 percent) and durable goods such as vehicles (13 percent).1

3. Harvest tax losses

We remain in a healthy bull market, but a rising tide doesn’t raise all ships. Many stocks, exchange-traded funds and mutual funds are in the red for the year. If you are holding one of these in your portfolio, consider whether closing at a loss makes sense for your overall strategy. Realized losses can be offset against any realized gains, helping to minimize your tax impact.2

4. Rebalance your portfolio

Once you’ve decided how to handle any losses you’re holding, take a holistic view of your portfolio. Review overall performance for this year and work with your advisor to assess your level of risk as the new year approaches. You’ll also want to ensure you are continuing to track toward any long-term financial goals. Rebalancing won’t necessarily generate higher returns, but it can reduce your exposure to market risk.

5. Consider deferring income

If you expect to be in the same or perhaps a lower tax bracket next year, talk to your tax advisor about whether you should defer income. For instance—if you own your own business, you might delay billing your clients until after the new year, thereby pushing those earnings into the next year.

6. Spend your Flexible Spending Account (FSA) funds

In many cases, unused money in your FSA will be lost at the end of the calendar year. That’s up to $2,600 a year per individual, as of 2017.3 An IRS change in 2013, however, gave employers discretion on whether to allow employees to carry over up to $500 in the new year.4 Make sure you’re aware of your company’s policy before using (or losing) your FSA funds.

In 2017, the number of FSAs is expected to reach 28.8 million, up from 23.9 million in 2014. By 2020, more than 32 million people are expected to take advantage of FSAs.5

7. Accelerate your deductions

The idea is to bunch your tax deductions in the year when they can be most effective in offsetting the taxes you owe. So if this was an especially income-rich year for you, talk to your tax advisor about ways you could add more deductions. One example might be pre-paying your 2018 property tax bill in 2017. Your tax advisor can guide you and give you information about when it makes sense to itemize and when the standard deduction will be most helpful. In addition, for those deductions that have to exceed a certain percentage— such as medical or dental expenses—bunching them into the same year may allow them to be itemized.

8. Donate to charity

The holiday season is a perfect time to give to an organization that’s meaningful to you. You have until December 31 to make a donation that will count toward your tax deductions for 2017. One alternative to giving cash is donating appreciated securities, which relieves you of the capital gains tax burden.

Note: If you’ve owned the security for less than a year, your tax deduction is limited to what you paid for the stock, not its present-day value.6

Charitable giving among American individuals totaled $281.86 billion in 2016, up 3.9% from the previous year.7

9. Max out your retirement contributions

As of 2017, you can contribute a maximum of $18,000 to a 401(k) and $5,500 to a traditional or Roth IRA.8 If you’re 50 or older, those amounts go up to $24,000 and $6,500. You have until December 31 to maximize contributions to employer-sponsored plans, if you have the means to do so. Traditional and Roth IRA contributions for a given calendar year can be made until that years’s tax-filing date (April 17 for 2018). If you’re getting a holiday bonus, consider putting all or some of that toward retirement, too. Your future self will thank you.

10. Take any required minimum distributions (RMDs), if you’re 70 1/2 or older

After reaching a certain age, you are typically required to start taking withdrawals from your traditional IRA, 401(k) and other defined contribution plans. (You’re also required to pay taxes on the resulting distribution.) The minimum distribution amount—which can be calculated with the help of your advisor and using worksheets from the IRS -must be taken by December 31. If you neglect to do this in time, you may face up to a 50 percent excise tax penalty on required withdrawals.9

One additional note, be sure to consult your tax advisor to determine whether the Alternative Minimum Tax will apply to you.

There are several steps to getting your finances in shape as 2018 nears, but dedicating a small amount of time—and having clear objectives for the short and long term—goes a long way toward gearing up for the year ahead.

For more on retirement and investing planning:

Call the SunTrust Investment Services Client Advisory Center at 844.206.8900 or learn more online.

Note: Center hours are 8-6 ET, Monday through Friday


1 “Personal Consumption Expenditures: What Do Americans Really Spend Their Money On?,” Oct. 6, 2017, The Balance

2 “What Is the Capital Loss Deduction?,” Feb. 17, 2017, The Motley Fool for USA Today

3 “What are the 2018 FSA contribution limits?,” Sept. 18, 2017,

4 “Grace Period or $500 Rollover for FSA?,” April 6, 2016, National Benefit Services

5 “U.S. Health Benefit Accounts: Account Spending Is on the Rise,” March 29, 2017, Aite Group

6 “5 Things You Should Know About Giving Stock to Charity,” Dec. 1, 2015, Kiplinger

7 “Giving USA 2017: Total Charitable Donations Rise to New High of $390.05 Billion,” June 12, 2017, Giving USA

8 “What Are the Maximum 401(k) Contribution Limits for 2017?” Dec. 17, 2016, The Motley Fool 

9 “Retirement Topics ­– Required Minimum Distributions (RMDs),” Aug. 26, 2017, IRS

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