2017 Year-End Financial Planning Checklist


While it is often the norm to spend the final days of the year preoccupied with checking items off long shopping lists, we urge you not to let your finances get lost in the shuffle.

In fact, with potential tax reform looming, planning for the end of the year is more important than ever. Over the coming weeks a number of powerful planning opportunities could present themselves if a new tax bill is passed. In the meantime, it is also important to make preparations for the things we do know – from maximizing retirement plan contributions to making charitable donations.

To simplify your end-of-year planning, we have prepared a detailed financial planning checklist. It is based on current tax law. As we learn more about tax reform in the coming days and weeks, we will be sure to relay the latest information.

The below guidelines provide additional details on the checklist items.

  1. Maximize Retirement Plan Contributions: If you have a 401(k) or other retirement plan at work, remember to make your allowable 2017 contributions before year-end. In 2017, you can elect to defer up to $18,000 of your compensation to a 401(k). Those aged 50-plus can defer an extra $6,000 for a total of $24,000. Additionally, some plans allow you to make after tax contributions, up to the IRS limit of $54,000.
  2. Fund Non-Deductible IRAs & Convert to Roth: Although your income may be too high to make a direct contribution to a Roth IRA, you can fund a Roth IRA by making a non-deductible IRA contribution and immediately converting it to a Roth IRA.
  3. Take Required Minimum Distributions: If you are 70 ½ you must take your Required Minimum Distribution for 2017. If you have several IRA accounts, you may take the distribution from just one, but the distribution must be calculated on the aggregate of your IRA balances. Please note once an RMD is taken, it is irrevocably distributed (and taxable).
  4. Make Deferred Comp Elections: If applicable you will need to determine ahead of year-end whether to defer a portion of your 2018 compensation. Benefits of deferring include possible tax savings and the opportunity to grow assets at a potentially higher rate of return. As with any investment decision, it is important to weigh out the benefits of deferring with your liquidity needs, time horizon and lifestyle choices. Additionally, you will be required to decide on a distribution election at the time of selection.
  5. Use up FSA Money: Time is running out to spend down the balance in you FSA plan. The IRS allows you to carry over $500 into next year. Anything above and beyond this amount will be lost. Beyond traditional uses, FSA monies can be spent on first-aid kits, hot and cold packs and even sunscreen, provided it meets certain requirements. You have until December 31st to submit all claims.
  6. Make Charitable Contributions: All charitable contributions must be made prior to December 31st to be taken as a deduction on this year’s tax return. If you do intend to make gifts, this should be considered along with a review of your portfolio as you may have highly appreciated stock that can be used for additional leverage on your gift. You can also make a direct charitable contribution from your IRA in place of your Required Minimum Distribution. Please be aware the amount you contribute is limited to $100k and you cannot make the distribution from SEP and SIMPLE plans if an employer contribution is made for that year. If you do intend to make a gift for 2017, we encourage you to do so by December 1st.
  7. Complete Annual Exclusion Gifts: In 2017, you can gift $14,000 person ($28,000 per couple, if the election is made to split gifts) to any individual. You should continue to use this annual exemption to help transfer assets and reduce your taxable estate. Please keep in mind contributions to 529 plans are considered gifts as are premiums paid on life insurance policies owned in an Irrevocable Life Insurance Trust. The current lifetime gift exemption is $5,490,000 in 2017.
  8. Fund 529 Plans: If you plan to contribute to a 529 account this year, be sure to do so by December 31st to take advantage of annual gift exclusions and to qualify for any state tax deductions on your 2017 taxes. If you pay for college directly to the institution, your payment is not considered a gift and there is no limitation on your contributions. (Please remember contributions to 529 plans are considered gifts)
  9. Open and Fund Roth IRAs for Children: If your children have earned income, you can use part of their annual gifting exclusion to fund a Roth IRA for each working child. This strategy helps transfer wealth to the next generation in a tax-efficient manner.
  10. Execute Crummey Notices: Confirm with your estate planning attorney or Trustees that written notice (Crummey Notice) is being provided to beneficiaries of their withdrawal power each year a gift is made to an Irrevocable Life Insurance Trust or other Trust that contains Crummey powers. It is important to store these notices in the event the IRS challenges past gifting. Failure to provide this documentation could comprise the tax status of assets held in the Trust.
  11. Review Beneficiary Designations: Year-end is a good time to review and update all of your beneficiary designations for your retirement accounts and life insurance policies.
  12. Analyze Taxable Accounts for Tax-Loss Harvesting Opportunities: There may be opportunities in your portfolio to sell out of a down position to book the tax loss. These losses can be used to offset up to $3,000 of ordinary income each year as well as an unlimited amount of capital gains. These losses can also be carried forward to future tax years. When using this strategy, make sure you do not violate the “wash sale” tax rules.
  13. Consider Roth IRA Conversion: Anyone, regardless of income, is now eligible to convert a Traditional IRA to a Roth IRA. The Roth IRA carries significant income tax advantages for both you and your beneficiaries, especially if the conversion is done with reduced asset levels. Please consult with your accountant to discuss potential taxes that could be owed in the same year as the Roth conversion.
  14. Recharacterize Roth Conversion: If your Roth account value is substantially less than the amount you converted months ago, you have the option to reverse the conversion in a Roth recharacterization. A Roth account holder has until their tax filing deadline to put the money back into a Traditional IRA. Please consult with your accountant before executing this move.
  15. Review Income Tax Projections and Determine AMT Status: Year-end is a good time to meet with your accountant to review projections for the year and determine your alternative minimum tax status. While it may not be possible to get rid of AMT completely, some options to consider to minimize your AMT liability include prepaying deductible business expenses near-year end if you run a business as a sole proprietorship, LLC, partnership, or S-Corporation, pushing income off into the next calendar year, and avoiding prepayment of real estate or fourth-quarter state estimated tax payments in December. Please be sure to consult with your accountant on this.
  16. Request Annual Credit Report: We recommend that you review a full credit report annually to make sure there are no surprises. You are allowed one free copy of your credit report each year. To request, go to annualcreditreport.com or call 877-322-8228. For those of you who have not done so already, you should consider signing up for a Credit Monitoring service.