Year-End Financial Planning: Smart Moves to Consider [Updated for 2022]

As we head into the end of the year, we’ve updated our annual recommendations for financial planning moves to make:
 

1. Make 2022 Contributions to IRAs (Individual Retirement Accounts)  
When? Before you file your taxes. 
 
If it’s part of your financial plan, consider “maxing out” your IRA by 12/31. This means contributing the maximum allowable contribution: $6,000 if under age 50, and $7,000 if above age 50. If you don’t have the cash flow to contribute by 12/31, don’t worry! Just make sure you do so before you file your taxes next year. 
 

2. Make 2022 Contributions to 529 Education Accounts  
When? Before 12/31. 
 
For clients living and contributing to 529s in states that have a state income tax deduction for contributions (like Ohio), be sure to contribute to those plans before 12/31 in order to claim this year’s deduction. 
 

3. Perform Conversions from Traditional IRA to Roth IRA  
When? Before 12/31. 
 
For those that are planning to do the Backdoor Roth strategy, be sure the conversion from Traditional to Roth IRA is complete by 12/31 in order to take any applicable tax in the current year. As a Commas client, your advisor will perform the Backdoor Roth Conversion for you on accounts that we manage! 
 

4. Take your Required Minimum Distributions from Retirement Accounts 
When? Before 12/31. 
 
If you have a Traditional IRA or 401(k) and you have reached the age of 72, OR if you inherited a Traditional IRA before 2020, you must take your Required Minimum Distribution by 12/31. If you forget to take the distribution by the deadline, you may be subject to a 50% penalty on the shortfall. As a Commas client, your advisor will make sure you’ve taken this distribution from all accounts that we manage! 
 

5. Donate to Charity  
When? Before 12/31. 
 
Donating to charity is an incredible way to support your community. It could also be a smart way to avoid capital gains taxes. Additionally, if you itemize your taxes instead of taking the standard deduction, charitable donations could enable you to deduct even more! 
 

6. Check Your Beneficiaries 
When? Once annually. 
 
It’s a good practice to check your beneficiaries on your accounts at least annually. A beneficiary will receive the funds in your account if you pass away. To check your beneficiaries on accounts that Commas manages, log into Betterment >> navigate to Settings >> then Accounts. 
 

7. Line Up a Tax Specialist for Filing your Taxes 
When? By January. 
 
Having your financial advisor and tax preparer work together can help ensure that your tax and financial plans are aligned. The sooner you can establish a relationship with a CPA, the better.

Commas is a wholly-owned subsidiary of Truepoint Inc., a fee-only Registered Investment Adviser (RIA). Registration as an adviser does not connote a specific level of skill or training. More detail, including forms ADV Part 2A and Form CRS filed with the SEC, can be found at www.commas.devphase.io. Neither the information, nor any opinion expressed, is to be construed as personalized investment, tax or legal advice.