With the end of the year fast approaching, many find it helpful to consider a few strategies to maximize financial efficiency and align with future goals. Here are Stonewater Financial’s top five year-end recommendations for those looking to wrap up the year on solid financial footing.
1. Prepay for Big-Ticket Items
Preparing for larger expenses before year-end may help reduce taxable income for business owners. These could include essential purchases such as equipment, technology, or subscriptions anticipated for the coming year. Paying early can provide a cash flow advantage by potentially lowering this year’s tax liability.
2. Utilize the Annual Gifting Exemption
The IRS allows individuals to gift up to a certain amount per recipient each year without gift tax implications — the limit for 2024 is $18,000 per individual, double for couples. Using this annual gifting exclusion may help reduce the size of a taxable estate. This approach could also be beneficial for those wishing to support family members or friends financially.
3. Max Out Your Pension Plan Contributions
Contributing to a 401(k) is one option for tax-deferred growth and potentially reducing taxable income. In 2024, the maximum contribution limit is $23,000 for individuals under 50, with a “catch-up” contribution of an additional $7,000 for those 50 and older. Making the most of these limits could be helpful in retirement planning while offering potential tax advantages.
4. Review Employee Benefits
Year-end is often a good time to review employer-sponsored benefits. Many companies update health insurance, retirement plans, and other offerings as part of the annual open enrollment period. Adjusting these benefits to match personal and family needs may be beneficial, especially after significant life events, such as marriage, the birth of a child, or career changes.
5. Consult with Steven or Your Financial Advisor
It might also be beneficial to connect with a financial advisor regarding any recent changes in your life that could affect your financial plan. Life events can impact various areas of financial strategy, and a conversation with an advisor could provide insights on possible adjustments to help align with current goals and circumstances.
