8 Tips for a Year-End Investment Checkup

Before the end of the year, it is advisable to take some time to consult with tax and investment advisors to run through a checklist of investment strategies and actions to maximize return and minimize taxes.

1. Review your retirement plan(s).

Life, business, and goals change, so at least once each year you should review your Traditional IRA, Roth IRA, or 401(k) to see if your plan still serves your goals. Also check to see if your contribution or other things need adjustment.

2. Max out your retirement accounts.

For most people, one of the most important retirement building actions to take is to max out their retirement account contributions. The tax free growth of these contributions is compounded over time, so max out this year’s contributions.

3. Actions if your accounts are already maxed out.

If you can, open and contribute the max amount allowed to a Roth IRA or Roth 401(k) in after tax dollars. If you earn too much to contribute to a Roth IRA, there is a strategy known as a backdoor Roth IRA. This involves putting money into a traditional IRA, paying taxes on that money, and rolling it into a Roth IRA.

4. Check payroll deductions allowable for contributions.

Many employer sponsored retirement plans and health savings accounts involve payroll deductions and often employer matching. Find out your payroll deduction deadlines for contributions and make any allowed before cut-off dates. Check your health savings accounts as well to see if there are opportunities for contributions.

You can contribute up to $3,600 to an HSA for individual coverage and $7.200 for a family account. Money left unspent can remain in the account and grow tax free and withdraw after age 65 for medical or non-medical expenses without tax penalties.

5. Consolidate investment accounts.

Over time, you can end up with multiple investment and retirement accounts that you may tend to leave unattended. They often are not doing their best for your long term return on investment. Consolidating some old IRA accounts and rolling them into a new IRA, Roth IRA, or 401(k) can increase their growth over time.

6. Check on taxable investment accounts.

There are far more taxable investment accounts, from stocks, bonds, and mutual funds to commodities and other investments. This is an area that should get considerable scrutiny. While you do want to consider ROI, you want to also balance that with current market conditions and risk profiles.

It may be time to harvest losses, to take capital gains, or both to minimize taxes on gains. Based on current market conditions, you may want to move assets into other investment types that are showing better performance.

7. Review your estate planning.

It is true that your estate plan is not an investment, but it does determine what happens to your investments if or when you become incapacitated or you die. Questions you may want to ask yourself in this review include:

• Have you had properties or valuables appraised recently?
• Are all your assets in your plan, including those recently acquired?
• Is your will still as you want it, and are your beneficiaries still in line with your wishes?
• Is your estate set up for maximum tax advantage?

This is good practice every year to keep your estate plan on track.

8. Fund investment accounts for dependents.

The earlier you put aside money for dependents, the more you can build up over time for their education and well-being later without you. Between tax advantages and compounding of interest, you can grow significant value accounts for your dependents.

As the end of the year approaches, all these actions are worthy of consideration. Consult with tax and investment advisors for help.