5 FINANCIAL TASKS TO COMPLETE BEFORE THE END OF THE YEAR
SUMMARY
October is Financial Planning Month. As we enter the final months of 2021, now is a great time to make sure you are up to date and taking advantage of year-end opportunities.
TAKE YOUR RMD
Although there was hope that required minimum distributions (RMDs) would be waived for a second year, the government did not allow for this in 2021. If you are in RMD status (age 72 or older), you have until December 31, 2021, to take the IRS-calculated amount. Non-spouse beneficiaries who inherited IRAs prior to 2020 will also have to take their RMD this year. If your account with Day Hagan requires a distribution and you have not yet taken it, the team at Day Hagan will be reaching out in the coming weeks to ensure it is processed in a timely manner.
FINALIZE YOUR QUALIFIED ACCOUNT CONTRIBUTIONS
Not yet in RMD status and still working? If you have earned income and can swing it, now is the chance to increase or max out your contributions to your 401(k), 403(b), or SIMPLE IRA. Consider sinking part of any end-of-year bonus into your retirement account. Traditional, Roth, and SEP IRAs, as well as health savings accounts (HSAs), can continue to be funded for 2021 until April 15, 2022.
| Retirement/Health Accounts | 2021 Employee Contribution Limits | Deadline |
|---|---|---|
| 401(k), 403(b), most 457s, TSP | $19,500 ($6,500 catch-up) | December 31, 2021 |
| Traditional & Roth IRA (Total) | $6,000 ($1,000 catch-up) | April 15, 2022 |
| SEP IRA | 25% of compensation, up to $58,000 | April 15, 2022 |
| SIMPLE IRA | $13,500 ($3,000 catch-up) | December 31, 2021 |
| HSA | $3,600 (individual), $7,200 (family), $1,000 catch up) | April 15, 2022 |
HARVEST TAX LOSSES
Day Hagan will look for opportunities to do this in your accounts with us. However, if you have accounts elsewhere, now is the time to coordinate strategic tax loss harvesting to offset gains and minimize your tax obligation. Remember that you can also carry over up to $3,000 of previous years’ capital losses to offset ordinary taxable income. Consult a tax professional for further detail.
DRAIN YOUR FSA BALANCE
Flexible savings accounts (FSAs) can be used to pay, tax free, certain out-of-pocket medical costs and other expenses, such as eyeglasses and contacts, dental treatment, and even lodging and mileage expenses incurred because of medical treatment. Sometimes, FSAs allow you to pay for dependent care. However, if the funds inside the FSA are not used by the end of the year, you will lose them. While some employers allow a grace period of up to 2.5 months or a rollover amount of $500 per year, make sure you check the specifics of your plan and use your full benefits before they expire.
ENROLL IN A HEALTHCARE PLAN
Medicare open enrollment for 2022 coverage starts on October 15, 2021, and ends December 7, 2021, while the Health Insurance Marketplace open enrollment period starts on November 1, 2021 and ends, in most states, on January 15, 2022. For coverage that starts on January 1, 2022, however, enroll by December 15. Be sure you’re covered and happy with your insurance before the deadline.
Best,
Natalie Brown, CFP®
Director of Client Services
Day Hagan Private Wealth
—Written 9.27.2021.
Print PDF Copy of the Article: Day Hagan Private Wealth Insights: 5 Financial Tasks to Complete Before the End of the Year (pdf)
Disclosure: The data and analysis contained herein are provided “as is” and without warranty of any kind, either express or implied. Day Hagan Private Wealth (DHPW), any of its affiliates or employees, or any third-party data provider, shall not have any liability for any loss sustained by anyone who has relied on the information contained in any Day Hagan Private Wealth literature or marketing materials. All opinions expressed herein are subject to change without notice, and you should always obtain current information and perform due diligence before investing. DHPW accounts that DHPW or its affiliated companies manage, or their respective shareholders, directors, officers and/or employees, may have long or short positions in the securities discussed herein and may purchase or sell such securities without notice. The securities mentioned in this document may not be eligible for sale in some states or countries, nor be suitable for all types of investors; their value and income they produce may fluctuate and/or be adversely affected by exchange rates, interest rates or other factors.
Investment advisory services offered through Donald L. Hagan, LLC, a SEC registered investment advisory firm. Accounts held at Raymond James and Associates, Inc. (member FINRA, SIPC) and Charles Schwab & Co., Inc. (member FINRA, SIPC). Day Hagan Asset Management and Day Hagan Private Wealth are both dbas of Donald L. Hagan, LLC. None of the entities listed here in this disclosure are affiliated.