Year-end Strategies You Can’t Afford to Miss

December 2024

As 2024 comes to a close, it’s a great time to review your financial plan and look for strategies that help optimize your long-term goals. Maximizing retirement contributions, fine-tuning tax plans, and planning for a meaningful charitable legacy aren’t just check-the-box tasks -- they represent key opportunities to strengthen one’s financial foundation for the coming year. Taking a thoughtful, strategic approach in December can make a significant impact on both the short-term and long-term success of your financial plan. 

Below are some of the most common year-end moves our clients take action on before year-end. Please note, everyone’s situation is different and some of these suggestions may not apply to everyone. 

Max Out Those Retirement Contributions

Retirement accounts like 401(k)s, IRAs, and SEP IRAs are pillars of tax-efficient planning. Contributions to these accounts reduce your taxable income now and grow tax-deferred until retirement. For 2024, the contribution limit for 401(k)s is $23,000, with an additional $7,500 catch-up if you're 50 or older.  It bumps up to $23,500 in 2025, with an additional $7,500 for those older than 50 and another $11,250 for workers age 60 to 63. Make sure to increase your withholding amount for 2025 if it doesn’t adjust automatically.  For those that are eligible for SEP IRA contributions, Roth or IRA, you have until April 15th to make your 2024 contribution.  

Rethinking Roth: Conversion

If you’ve saved primarily in traditional retirement accounts, a Roth conversion could open new tax-free withdrawal options in retirement. Roth IRAs don’t require minimum distributions and can be tax-friendly during lower-income years given there is no tax to be paid when withdrawals happen. If you’re in a position where you are earning significantly less this year and are in a lower tax bracket, it could be worth considering a conversion now to lock in the benefit of a Roth IRA. 

Back Door Roth

Speaking of Roth IRAs, if your Modified Adjusted Gross Income is over $161,000 for single filers or $240,000 for those married filing jointly, you aren’t eligible for a Roth contribution directly, but a Back Door Roth Conversion may be a possibility.  This works best for those who are over the income limits, but don’t have retirement assets in an IRA already (a 401k is ok just not IRA).  The concept is to contribute $7,000 to an IRA account (after-tax dollars), and then next day or before growth occurs in the IRA account, transfer assets to a Roth IRA account.  No additional tax to be paid since you are using after-tax dollars.  You would have to file form 8606 for each year this conversion takes place.   

Make Annual Exclusion Gifts to Family

For those who want to help family members, the 2024 annual exclusion allows you to make tax-free transfers of $18,000 (or $36,000 for married couples) per recipient in cash or property without reducing your lifetime estate and gift tax exclusion amount. This will increase to $19,000 (or $38,000 for married couples) in 2025. Consider creative ways to give to your children, grandchildren, and loved ones including:            

• Gifting shares of stock to get them interested in learning about investing 

• Fund a 529 plan (state tax deduction applies in some states in the year of gift, but 529s allow tax free growth as long as funds are used for educational purposes in the future  

• If your children or grandchildren are working, your gift of cash could fund a Roth IRA to kickstart their retirement savings. 

Spend Unused FSA Funds

Check your Flexible Spending Account (FSA) balance and use any remaining funds before they’re forfeited. FSAs allow you to pay for eligible medical, dental, and vision expenses with pre-tax dollars, but many plans follow a "use-it-or-lose-it" rule. Make sure to use your funds before the year ends to maximize their value. 

Maximize Year-End Charitable Contributions

Year-end giving can do more than support a cause you care about—it can also offer tax savings. Donating appreciated stock, for example, could help eliminate capital gains taxes on those shares. If you’re over 70, making a Qualified Charitable Distribution (QCD) from your IRA can satisfy RMD requirements while benefiting your favorite charities. Or, if you have a big capital gains year coming up, consider opening a Donor Advised Fund (DAF). You don’t need to rush to identify a charity you’d like to support now, but you could make a charitable contribution to a DAF and earn the tax deduction now while being thoughtful of where you’d like to give in the future.  

Refining Your Cash Flow for the Year Ahead 

Reflecting on the past year is a great way to set up a clear path forward. Reviewing cash flow—such as tracking expenses and adjusting savings goals—ensures that your financial plans continue to align with your life changes and aspirations. One thing we like to do is create a summary of all money spent and calculate a percentage by spending category. Did most of your spending occur where you thought it would? Where you would have liked it to occur? Did you “spend” enough on funding your future retirement? Taking stock of where your money went and if it aligns with your values is a great way to reflect on the year and can help you clarify your plans for spending in the year ahead.  

Whether it’s maximizing retirement savings, refining tax strategies, or creating a charitable impact, these steps lay the groundwork for a stronger financial future. As 2025 approaches, there’s no better time to align your financial decisions with your long-term goals. With the right guidance and a clear strategy, you can confidently close out the year and step into the new one with greater control and peace of mind. 

Disclaimer

GoalVest Advisory is a SEC registered investment adviser. Information presented is for educational purposes only intended for a broad audience. The information does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. GoalVest Advisory has reasonable belief that this marketing does not include any false or material misleading statements or omissions of facts regarding services, investment, or client experience. GoalVest Advisory has reasonable belief that the content as a whole will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to Form ADV Part 2A the adviser’s ADV Part 2A for material risks disclosures. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, nature and timing of the investments and relevant constraints of the investment. GoalVest Advisory has presented information in a fair and balanced manner. GoalVest Advisory is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.