Consider these year-end financial moves – The Troy Messenger

As we enter the holiday season, your life may get busier. Still, you might want to consider some financial moves before we move the calendar to 2025.

Here are some suggestions:

Kenneth Green

• Review your investment portfolio. When analyzing your portfolio, ask the following questions: Did it perform to my expectations this year? Does it still reflect my goals, risk tolerance, and time horizon? Do I need to rebalance myself? You may find that working with a financial professional can help you answer these and other questions you may have about your investments.

• Add to your 401(k) and HSA. If you can afford it and your employer allows it, consider putting more money into your 401(k) before the end of the year — including “catch-up” contributions if you’re age 50 or older. You may also want to add to your health savings account (HSA) by the tax filing deadline in April.

• Use your FSA dollars. Unlike an HSA, a flexible spending account (FSA) works on a “use it or lose it” basis, meaning you lose any unspent funds at the end of the year. So if you still have funds in your account, try to use them in 2024. (Employers may grant a 2 1/2 month extension, so check with your human resources department to see if this is the case where you work.)

• Contribute to a 529 plan. If you haven’t already opened a 529 education savings plan for your children, consider doing so this year. With a 529 plan, your earnings can grow tax-deferred, and your withdrawals are federal tax-free when used for qualified educational expenses – tuition, fees, books, and so on. And if you invest in your own state’s 529 plan, you can deduct your contributions from your state income tax or receive a state tax credit.

• Build your emergency fund. It’s generally a good idea to keep up to six months of living expenses in an emergency fund, with the money kept in a low-risk, liquid account. Without this fund, you may be forced to use your retirement funds to pay for short-term needs, like a major car or home repairs.

• Review your estate plans. If you have experienced any changes in your family situation this year, such as marriage, remarriage or the birth of a child, you may want to update your estate planning documents to reflect your new situation. It’s also important to note the beneficiary designations on your investment accounts, retirement plans, IRAs, and insurance policies, as these designations can sometimes even override instructions you left in your will. And if you haven’t started estate planning yet, there’s no time like the present.

• Bring your RMDs. If you’re 73 or older, you’ll likely need to take withdrawals — called required minimum distributions, or RMDs — from some of your retirement accounts, such as a traditional IRA. If you don’t make these withdrawals every year, you could be subject to penalties.

These aren’t the only steps you can take, but they could be helpful not just for 2024, but for years to come as well.

Kenneth Green is a financial advisor to Edward Jones.