As we enter the finals days of 2024, the end of the year is a great time to make sure you are on track with your financial goals. Use these 7 reminders as a year-end checklist. And remember, if any of these suggestions seem confusing, our team at Plott and French is always a phone call away at your service.
- Review Your Credit Report With The Three Major Credit Bureaus
In the United States, consumers are legally entitled to one free credit report per year from each of the three major credit bureaus: Equifax, Experian, and TransUnion. It’s wise to review these reports annually at a minimum to make sure new accounts aren’t opened in your name without your knowledge. If you see something on your credit report that you didn’t do, you could be a victim of identity theft.
If you discover that your credit has been compromised, there are a few actions you should take:
- Report the identity theft to The Federal Trade Commission (FTC) online at IdentifyTheft.gov or call 1-877-438-4338
- Contact all three major credit reporting agencies (Equifax, Experian, and TransUnion) and ask them to place a free fraud alert and credit freeze on your credit report. Placing a credit freeze on your credit report will prevent new accounts from being opened in your name. You can temporarily unfreeze your credit if you need to apply for a loan or credit card.
- Contact the fraud department at your credit card issuers, bank, and other institutions where you have accounts.
- Change the passwords, pin numbers, and login information on all of your accounts.
- Consider identity theft protection services.
(Review our Spring 2024 Newsletter to learn more about protecting yourself from fraud and scams.)
- Review Your Credit Card Statements
Monitor Against Fraud: In addition to reviewing your credit reports from the 3 major bureaus, reviewing and monitoring your credit card statements is equally important to safeguard against fraud. For example, fraudulent charges on an existing credit card might not stand out on your credit report as no new account inquiries were made. Identity thieves with access to your credit card will strategically make fraudulent purchases in small amounts and at random times to remain undetected while slowly stealing your hard-earned dollars. Pay close attention to your statements as identity thieves can even frame the purchases to look like they were purchased from your local grocery store or gas station to seem like routine charges that you may incur.
Pay Off Those Balances: Make sure your credit cards and other lines of credit aren’t causing harm to your overall financial plan. Debt can sometimes be a slippery slope, taking you further into debt than you want to go and keeping you longer than you want to stay. For example, one might make a purchase using a promotional period of 0% interest for 12 months. However, after the promotional period ends the interest rate balloons to 18.99%. These can be the scenarios to watch out for as you make sure to pay off those credit cards or lines of credit that are lingering around.
Get Rid Of Old Reward Cards: It can be easy to accumulate a wallet full of credit cards in an attempt to earn reward points or benefits. Each time you apply for a credit card, the lender will request a copy of your credit report from one of the major bureaus. This process is known as a hard inquiry. Too many hard inquiries over a short period can harm your credit score. Take time this quarter to make sure those reward card balances are paid off and ask yourself if the reward cards you have are the ones that you need. If canceling and then cutting up some of those old cards, make sure your credit utilization ratio will still be in a healthy range (generally below 30%) as utilizing too much of your available credit can negatively impact your credit score.
- Shop Around For Property & Casualty Insurance
It’s wise to shop around for P&C insurance on an annual basis as companies raise and lower their prices in competition. Also consider paying your premiums annually instead of monthly to receive a discount. If your home’s replacement cost increases due to improvements or additions, you might need to increase your coverage. Consider umbrella insurance for added liability coverage. Umbrella insurance can be surprisingly inexpensive.
- Review Your Employee Benefits
Health Insurance: Check with your employer to see when your annual enrollment window opens to allow you to enroll in coverage or make changes to existing coverage.
HSA/FSA: Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are both tax-advantaged accounts which can be used to pay for qualified medical expenses. HSAs generally allow unused funds to carry over to the next plan year while FSAs are usually “use-it or lose-it” and do not carry over, with some exceptions.
Retirement Contributions: Make sure that you’re taking advantage of company matches. Most ERISA Retirement plans allow catch-up contributions to those aged 50 or over. Talk with us in collaboration with your tax advisor to see if “pre-tax” or “after-tax” contributions better suit your financial plan.
Group Life & Group Disability Insurance: The choices involved in selecting the appropriate amount of Group Term Insurance and the options around Disability Insurance can often be nuanced. We are always happy to help you choose the optimal choices for your situation.
- Tax Efficiency Strategies (Tax-Loss Harvesting / Roth Conversions)
As the end of the year approaches, you now have a much better idea of your total income and deductions that will shape your tax situation. These are some strategies that we help our clients with in collaboration with their tax advisor.
Tax Loss Harvesting: This strategy is used to offset or reduce capital gains taxes incurred by the sale of a profitable investment by selling nonprofitable investments at a loss.
Roth Conversions: This strategy involves paying taxes on pre-tax retirement dollars to convert them to after-tax dollars. Some people use the “bracket filling” concept to convert just enough dollars to “fill up” their current marginal tax bracket.
- Review Beneficiary Designations and Estate Planning Documents
If you’ve had any major life events that happened over the past year such as marriage, divorce, death, incapacity, or a change in how your family operates, review your beneficiary designations and estate planning documents. Even if you haven’t had any major life changes this year, reviewing your estate plan every few years is wise.
- Map Out Your Gifting
Annual Gift Tax Exclusion: In 2024, you can give someone up to $18,000 per year without being subject to gift tax. This amount is called the annual gift tax exclusion and can be used for an unlimited number of people. If you give someone more than the annual gift tax exclusion amount, the amount reported to the IRS will be deducted from your lifetime gift tax exemption amount which is $13.61 million in 2024.
If you and your spouse elect “gift splitting” then you can combine your annual exclusion amounts to give $36,000 to one individual in 2024. This might allow a larger gift from one spouse to be considered one-half by each spouse.
529 accounts allow for an exception in the gift tax rules in that the account can be “superfunded.” You can make 5 years’ worth of contributions ($90,000 in 2024) all at once without counting against your lifetime gift tax exemption.
Charitable Contribution Deductions: In 2024, you may be able to deduct a percentage of your charitable gifts if you itemize your deductions.
Qualified Charitable Distributions (QCDs): If you are 70 ½ years old or older, the IRS will allow you to gift from your pre-tax retirement account(s) up to $105,000 per year as an individual and $210,000 as a couple to a qualified charity. This will allow you to make a charitable contribution with pre-tax dollars and can also count to satisfy your RMD all at once. This can be especially beneficial for those who otherwise could not deduct charitable contributions as they do not itemize their deductions.
Securities and Investment Advisory Services offered through Geneos Wealth Management, Inc. Member FINRA/SIPC
