End of the year planning Tips

Eric Wasson , Vice President of Business Development, Hefty Wealth Partners has 5 tips that will help with your end of year financial planning.

END OF YEAR PLANNING TIPS:

1. Review your income and expenses
How did you perform against your own budget for the year? If you didn't do as well in 2012 as you'd like, make changes now for 2013. Waiting until it is too late can cause a multi-generational financial strain. For example, CD rates aren't what they were a few years ago. If that was income you were counting on, what are you doing now to compensate for the difference? Make sure you account for all funds coming in and going out.

2. Take a look at your education spending and saving
For those receiving 529 distributions, you probably already know they are designed only for qualified higher education expenses related to a college education. The distributions are tax free - only if the distribution and the expense happen in the same year. Make sure you take advantage of this before 2012 is over. If you are still contributing to a 529, check in and see how it's performing. If it's not where you wanted it to be, there is still time to max out 529 contributions.

3. Inspect your investments and financial plan

It's important to acknowledge that there is no investment strategy that works all of the time.  That's why it is important to review your portfolio so you are confident in the strategy you have in place. The end of the year great time to do that so you can make decisions based off your specific situation and not the momentum of the market. An annual review of your investments and also of your financial is a very important part of the planning process. Unless you have an actual plan in place, your investments can actually end up controlling you, not the other way around.

4.      Control your destiny!

There is a good chance we will see an increase in taxes in 2013 because of the fiscal cliff, the presidential, a 0 percent interest rate policy in effect and the Fed printing as much money as they have to in order to stay out of big trouble. Decisions you make right now, through the end of the year, can be done in a very controlled way. Right now you know what the tax rates are.  If you take gains right now, you could save yourself money in the future.

5.      Review retirement contributions and distributions

If this is the year in which you turned 70 ½, your required minimum distribution must be taken out before 4/01/2013. However, if you want to minimize taxes, it may make more sense to take the distribution before 12/31 so it is included in your 2012 taxes. Also, for those still saving, you have time to max out your retirement plan contributions for the year. For example, you can stock away $17,000 tax free in your 401k. Depending on your financial situation, it might make sense to put any extra money you may have toward your retirement plan.