Your Year-End Financial Checklist

December 11, 2023

On today's episode of the "The Runway Decade Podcast," hosts Bill Bush and Pete Bush, advisors at Horizon Financial Group discuss their recent move to a new building and reflect on the 18 years spent in the previous one. They highlight the excitement of settling into a new studio and navigating the unfamiliar surroundings. As the year comes to a close, they emphasize the significance of the year-end financial planning webinar Bill conducted in November. Bill mentions a checklist from the webinar, available on the Runway Decade website and Horizon site, which covers crucial opportunities and considerations at the close of the year.

Episode Highlights:
  • 01:58: Bill and Pete highlight the significance of harvesting gains and losses, considering the recent market fluctuations and the impact on capital gains tax.
  • 02:24: Pete explains the process of offsetting gains with losses, illustrating how taxpayers can minimize their tax liability by strategically managing investment gains and losses.
  • 03:10: The hosts mention the net investment income tax, its relevance for individuals with AGI over certain thresholds, and the importance of proactive planning with CPAs.
  • 05:36: Bill mentions the potential impact of the Tax Cuts and Jobs Act, suggesting taxpayers project their income and consider the possibility of tax bracket changes.
  • 07:32: The hosts delve into retirement planning, specifically emphasizing the importance of maximizing contributions to 401(k) plans before the end of the calendar year.
  • 09:13: Bill and Pete discuss additional year-end financial planning considerations, including making IRA contributions, exploring Roth conversions, and opening retirement plans for self-employed individuals.
  • 10:38: Bill emphasizes the importance of examining asset allocation, rebalancing portfolios, and considering tax-loss harvesting opportunities.
  • 12:12: Pete addresses the impact of changing market conditions on different stock categories, encouraging investors to assess the tax implications of potential gains and losses.
  • 14:06: The hosts discuss the tax implications of dividend distributions and the need for investors to anticipate taxable income from dividends.
  • 15:23: Pete emphasizes the importance of having the right types of insurance coverage and being proactive in assessing coverage needs.
  • 16:50: Bill introduces the topic of financial milestones, focusing on age-related events. The Rule of 55 allows penalty-free distributions from a 401(k) if you've left a job at age 55.
  • 18:33: Pete mentions the significance of considering Medicare premiums, influenced by income. Changes related to moving, refinancing, marriage, ending a marriage, and updating beneficiaries are discussed.
  • 20:26: The hosts highlight the benefits of Health Savings Accounts (HSAs), especially for those in high deductible plans, and the triple tax advantages they offer.
  • 22:49: Bill and Pete discuss gifting and the importance of tracking basis for gifts and inheritance. They also touch on state-specific considerations, like Louisiana's 529 plan deductions.
  • 24:13: The hosts stress the importance of seeking professional assistance, including CPAs and insurance agents, and emphasize the "who not how" concept from a book they previously discussed.

Key Points:
  1. Conduct a comprehensive review of your finances towards the end of the year, focusing on tax planning, investment strategies, and overall financial health.
  2. Be mindful of age-related financial milestones, such as retirement plan contributions at age 50 and Medicare enrolment at 65, to adapt your financial plan accordingly.
  3. Regularly reassess and rebalance your investment portfolio, considering market volatility. Explore tax-efficient strategies like tax-loss harvesting and Roth conversions for better financial outcomes.

Tweetable Quotes:
  • "In the financial world, the clock strikes midnight on December 31st, taking away many opportunities. Time to seize the last chance for year-end financial planning”
  • "Milestones matter! Age 50 brings catch-up contributions, 55 unlocks penalty-free 401(k) distributions, and 59½ marks the start of IRA withdrawals without penalties. Plan for these key financial checkpoints”
  • "Change is constant, be ready! Did you move, get married, or refinance your house? Don't forget to update your financial details. Small actions now can prevent big surprises later”

Resources Mentioned:

The Runway Decade