A Financial To-Do List for Summer’s End

A recent article in the Wall Street Journal provided a good checklist as the days get shorter and the year winds down.

1. Wills and Estates

Review your plans and see if there are any changes or updates that need to be made.  This includes new accounts, new assets, beneficiary designations in retirement accounts and insurance policies.

2. Insurance Policies

Go over insurance policies to make sure you have suitable coverage and aren’t paying too much in premiums.  Old policies can often be more expensive because of old mortality assumptions.

3. Investment Accounts

Make sure you are keeping up with contributions to a 401(k), individual retirement account or 529 college-savings plan.

If you hit the big 5-0 this year, you can start making catch-up contributions to your 401(k) or IRA.

Owners of traditional IRAs must start taking required minimum distributions, or RMDs, by April 1 of the year after they turn 70½.

4. Flexible-Spending Accounts

Remember that if you don’t use up the tax-free money in a flexible-spending account by year-end, you lose it (though some plans offer a grace period).   If there is unused money buying new glasses or having a medical procedure done that you have put off may use it up.

5. Charitable and Family Gifts

Get a move on your annual charitable giving, especially if it’s going to be a noncash donation to a nonprofit.  Low cost basis stock is often the best way to fulfill a pledge to a church or charity.

This year, you also can give as much as $13,000 to each of as many individuals as you want without any tax consequences.

6. Tax Rates

Some big changes kick in next year if the Bush tax cuts are allowed to expire and other tax changes go into place.  Do some tax planning.  There is a lot of undone business before the Congress and the President regarding changes in tax rates, so the actual rates in 2013 are still uncertain.  Congress may pass legislation that would hold off some or all of the changes, so keep an eye on Washington.

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