Littlejohn column: 2022 year-end financial planning checklist

With yr-close speedily approaching, in this article are some useful fiscal to-do’s you can look at off your listing just before Jan. 1 rolls all around: 

1. Evaluation and update your employee gains

Although timing can change, a lot of employers give benefit “open enrollment” in the vicinity of the conclusion of the yr. Open enrollment can offer a terrific opportunity to make strategic economic choices although maximizing your payment package deal.



Begin by examining any new changes to your advantages package. Then, think about how your economic scenario has modified this year — or how you be expecting it to adjust future 12 months — and select your benefits accordingly.

Listed here are a number of vital added benefits to look at incorporating or updating:



  • Insurance: Lifetime, disability profits, and wellness insurance policy are some of the most useful gains.
  • Retirement: Be certain to just take advantage of the advantages your prepare provides, regardless of whether it is a 401(k) with matching contributions, an personnel inventory invest in strategy, or a deferred compensation approach.
  • Authorized: Some companies offer you legal providers at a discounted fee. If you have obtain to this reward, you may perhaps want to think about making use of it to make or update important estate planning files.

2. Carry out a 2022 tax overview

For most taxpayers, Dec. 31 will mark the end of the 2022 tax yr. That means year-end might be your very last probability to proactively lower your 2022 tax monthly bill.

As you critique your tax predicament, right here are seven vital tax-organizing ideas to take into consideration:

  1. To start with, determine any alterations to your tax condition.
  2. Harvest cash gains or losses.
  3. Overview your charitable offering strategy.
  4. Look for approaches to reduce taxable earnings.
  5. Consider Roth conversions in reduced-cash flow several years.
  6. Make any remaining yearly exclusion gifts for 2022.
  7. Donate your RMD for an earlier mentioned-the-line deduction.

3. Review your investment portfolio and rebalance if important

Yr-finish can also be a fantastic time to critique your investments and make updates or contributions as wanted.

1st, evaluation your wished-for asset allocation — which is your ideal blend of stocks, bonds, and other property in your portfolio. This blend should really replicate your economical goals, as very well as the amount of money of possibility you’re inclined to get with your investments.

Then, cross-examine your preferred asset allocation with your present expense portfolio and take into account rebalancing your accounts if necessary. Just bear in mind, if you’re rebalancing within just a taxable account, you may bring about capital gains and/or losses.

4. Increase your retirement program contributions

If you haven’t maxed out your retirement strategy contributions for 2022, now may possibly be a very good time to do so. In 2022, the contribution restrict for staff who take part in 401(k), 403(b), most 457 programs is $20,500 (moreover a $6,500 capture-up contribution if you are age 50 or more mature). In 2023, this restrict will improve to $22,500, plus a $7,500 catch-up contribution.

For specific retirement accounts (IRAs), you can lead up to $6,000 in 2022, in addition a $1,000 catch-up contribution for those people age 50 and older. In 2023, this restrict will boost to $6,500, with the $1,000 catch-up contribution remaining the very same.

5. Consider creating charitable donations

As you evaluation your charitable donations for the yr, recall that you can only take a charitable deduction on your tax return if you itemize deductions. If you never generally itemize, consider “bunching” your donations if you have additional hard cash on hand. Bunching signifies making two or a lot more years’ value of donations in the current calendar year to improve the total you can deduct from your taxes.

You might also want to look at donating to a donor-suggested fund (DAF). A DAF makes it possible for you to make a charitable donation and just take the deduction in the existing yr. Having said that, not like bunching, you never have to determine where your donation goes right away.

6. Don’t neglect to take RMDs

The deadline to just take needed minimum distributions (RMDs) is Dec. 31. The IRS involves any one age 72 or more mature to choose RMDs from their common IRA(s). There are no RMDs for Roth IRAs until they are inherited.

If you really do not will need the extra money this 12 months, you can donate your RMD to charity by making a qualified charitable distribution (QCD). A QCD allows IRA house owners to transfer up to $100,000 straight to charity each year. Compared with RMDs, QCDs are excluded from your taxable profits. 

It’s vital to observe that the IRS considers the first pounds out of an IRA to be your RMD right until you meet up with your requirement. If you choose advantage of this tactic, be confident to make the QCD right before creating any other withdrawals from your account.

Brian Littlejohn, MBA, CFP®, CFA is the founder of Sherwood Prosperity Administration, an independent registered investment advisor firm. He specializes in inherited wealth and operates with shoppers in the Roaring Fork Valley and further than.