No Loose Ends

It’s almost Halloween, and there are spooky things everywhere you look. Though this time of year is often intentionally scary, don’t let fear control you, especially when it comes to your finances. Sometimes fear of what’s waiting around the corner, or the big scary unknown, can stop us dead in our tracks and keep us from pursuing our goals and habits that we know are good for us.

Before the holiday season is in full swing, here is a list of moves you may want to make so you can fully relax and enjoy the festivities:

Health Savings Accounts: Check the balance of your health savings account
If you’re on a high-deductible health plan and not enrolled in Medicare, you may qualify to make tax-free contributions to a health savings account to pay for medical expenses and lower your taxable income. Maximum contribution amounts for 2022 are $3,650 for self-only and $7,300 for families. The annual “catch-up” contribution amount for individuals age 55 or older will remain $1,000. The money in the account can be invested tax-free, and if you use it for qualified medical expenses you won’t owe any taxes.
IRA or Retirement Plan: Max out your retirement contributions
In 2022, you can contribute $20,500 in your 401(k) or other employer-sponsored retirement plan, plus an extra $6,500 in “catch-up” contributions if you’ll be at least age 50 this year, bringing your total 401(k) contributions for 2022 to $27,000.
If you don’t have a workplace plan, you may still be able to tuck away up to $6,000 ($7,000 if you’re 50+) in a traditional IRA—and so can your spouse if they’re not employed.
If you are self-employed, your limits are even higher — up to $61,000 or 25% of your qualifying income, whichever is less, if you have a Simplified Employee Pension (SEP) plan IRA. If you don’t, there’s still time to set one up to take advantage of the tax benefits.
Finally, consider contributing to a Roth IRA, if you are eligible, up to $6,000 ($7,000 if you’re age 50 or older).
IRA Requirement Minimum Distributions: Retirees, be sure to take your IRA Required Minimum Distributions
If you were born in or before 1950, you may have an annual Required Minimum Distribution (RMD) from your IRA. This is the time to check to make sure you have completed the IRA RMD or have a plan in place before the end of the year. The IRS will impose a 50% tax on any remaining required minimum distribution amount not distributed by December 31.
Charitable Contributions (or QCDs): Calculate how much you give in year-end donations to your favorite charity for the greatest benefit
Think about it. Donate to an organization that’s close to your heart. The benefits are two-fold. You will reduce your taxable income and feel good about giving some of your hard-earned dollars to a good cause. It’s a win-win. If you are over the age of 70½, consider making a QCD from your IRA.
Plan ahead for education expenses: 529 Plan
With a state-based 529 college savings plan, anyone can give up to $16,000 per year, tax free, to help fund a child’s college or some K-12 expenses. Investments in 529s grow tax deferred, and withdrawals are federal tax-free when used toward qualified education costs. These can include textbooks, tuition and fees, some room and board, and student loans (up to a lifetime maximum). Many states offer residents tax breaks on 529 contributions or withdrawals too.
Get ahead of next year’s tax return: Revisit your tax withholding
Changes in dependents, income, and marital status can all affect your tax bill. Use the IRS’s tax withholding calculator or contact your CPA to decide how much you want to be withheld from your take-home pay moving forward.
Make sure you’re adequately insured: Review life insurance policies
Has your family grown this year? Bought a house? Started a business? The insurance coverage you had at the start of the year may not be enough for your needs in the new year.
Check to see if your life insurance policy protects your spouse and children, and that you have enough liability coverage on your home and car. Depending on your assets, you may need an umbrella liability policy. You may also need extra coverage if you use your home or car for business.
Get a free copy of your credit report
You’re entitled to one free copy of your credit report every year. The Federal Trade Commission (FTC) website explains your right to a credit report and provides contact information for their authorized vendor. AnnualCreditReport.com is the only FTC approved site and has provided the ability to pull credit histories to consumers for no cost. Once you’ve got your report in hand, carefully review it and correct any errors.
Think about legacy goals – estate planning
There are things you can do at every stage of life to make sure your family’s hopes and dreams are realized. When you apply for a life insurance policy, 401(k), IRA, and even some non-retirement accounts, you will be asked to name one or more beneficiaries. A beneficiary is the legal name of the person or persons you want to inherit the proceeds from your accounts or policies after you die. This can make a huge difference to your estate planning because many people don’t realize that a will does not control who receives all of their assets when they pass away. So not naming beneficiaries when asked to could mean your money gets tied up in probate for months or years.
Consider reviewing or naming a health care proxy to make medical decisions on your behalf if you aren’t able to make them for yourself.
Check or review who is named as your financial power of attorney — the authority to make financial decisions for you if you’re unable to do so. Are there any changes that should be made?
Make a financial New Year’s resolution
Every new year presents a fresh, new beginning. What are your financial goals? Will you finally pay off your mortgage? How much would you like to see in your emergency fund in 6 or 12 months from today? Maybe you’d like to get some retirement planning advice. Whatever your financial goals, write them down, create some milestones, and share them with your client centric team at Greenleaf Trust.

When it comes to money, we know it literally pays to attend to even the smallest of details — but sometimes finding the time to do everything can feel overwhelming. From this list, break down your to-do list into manageable steps. We can guide you through this process and help keep you on track.