Investments & Retirement

Year-End Investment and Retirement Planning

The end of the year presents critical opportunities to maximize your investment returns and retirement savings. Strategic moves now can compound into significant wealth over time.

Maximize Retirement Contributions

401(k) and 403(b) Plans

• 2024 contribution limit: $23,000 ($30,500 if age 50+)
• Ensure you're contributing enough to get full employer match
• Consider increasing contributions before year-end
• Review your investment allocation and rebalance if needed
• Check if your plan allows after-tax contributions

Individual Retirement Accounts (IRAs)

• 2024 contribution limit: $7,000 ($8,000 if age 50+)
• You have until April 15, 2025 to contribute for 2024
• Consider Traditional vs. Roth IRA based on tax situation
• Check income limits for Roth IRA eligibility
• Explore backdoor Roth conversion strategies

Health Savings Accounts (HSAs)

• 2024 contribution limit: $4,150 individual, $8,300 family
• Triple tax advantage: deductible, tax-free growth, tax-free withdrawals
• Contribute before December 31 to count for current year
• Invest HSA funds for long-term growth
• Save receipts for future tax-free reimbursement

Portfolio Rebalancing

Year-end is an ideal time to rebalance your investment portfolio:

• Review your target asset allocation
• Identify overweight and underweight positions
• Sell appreciated assets in tax-advantaged accounts
• Coordinate rebalancing with tax-loss harvesting
• Consider your risk tolerance and time horizon
• Rebalance across all accounts for tax efficiency

Asset Allocation Guidelines

A well-diversified portfolio typically includes:

• Domestic stocks (40-70% depending on age and risk tolerance)
• International stocks (15-30% for global diversification)
• Bonds (age in bonds rule of thumb, adjust for risk tolerance)
• Real estate (5-15% through REITs)
• Cash and equivalents (3-6 months expenses for emergency fund)

Required Minimum Distributions (RMDs)

If you're age 73 or older, you must take RMDs from retirement accounts:

• Deadline: December 31 (except first RMD, due by April 1 of following year)
• Penalty for missing RMD: 25% of the amount not withdrawn
• RMDs apply to Traditional IRAs, 401(k)s, and other retirement accounts
• Roth IRAs are exempt from RMDs during owner's lifetime
• Consider qualified charitable distributions to satisfy RMDs
• Plan for the tax impact of RMD income

Tax-Efficient Investing Strategies

Asset Location Optimization

Place investments strategically across account types:

• Tax-advantaged accounts: Bonds, REITs, actively managed funds
• Taxable accounts: Tax-efficient index funds, municipal bonds, long-term holdings
• Roth accounts: Highest growth potential investments
• Consider state tax implications for municipal bonds

Tax-Loss Harvesting Strategy

• Review portfolio for positions with unrealized losses
• Sell losing positions to offset capital gains
• Offset up to $3,000 of ordinary income with excess losses
• Carry forward remaining losses to future years
• Avoid wash sales by waiting 30 days to repurchase
• Consider similar but not identical replacement securities

Retirement Account Consolidation

Simplify your retirement savings by consolidating accounts:

• Roll over old 401(k) accounts to an IRA
• Benefits: Lower fees, more investment options, easier management
• Consider leaving money in 401(k) for creditor protection
• Evaluate institutional pricing in old employer plans
• Review all accounts to ensure proper asset allocation

Investment Review and Analysis

Conduct a comprehensive portfolio review:

• Analyze investment performance vs. benchmarks
• Review fees and expense ratios
• Identify underperforming funds or holdings
• Assess whether investments still match your goals
• Consider low-cost index funds for core holdings
• Review diversification across sectors and geographies

Beneficiary Designations

Retirement accounts pass directly to beneficiaries, bypassing your will:

• Review all beneficiary designations annually
• Update after major life events (marriage, divorce, birth, death)
• Name contingent beneficiaries
• Consider implications for estate and income taxes
• Coordinate with overall estate plan
• Review rules for inherited retirement accounts