Year-End Financial Checklist

With the holidays and end of year upon us, we at ZRC Wealth Management would like to thank our clients, friends and partners for their support over the years. In the spirit of the season, we offer these Year-End Financial Tips to increase your wealth and plan for a financially secure future.

  1. Maximize your 401K and retirement plan contributions. For 2021 the max “employee portion” of the 401K is $19,500 (plus an additional $6,500 catch-up contribution if you are 50 or older this year). Establish a 401(k) plan, solo 401(k) plan, or SEP-IRA (if self-employed). As an owner, there’s a good chance you can contribute a lot more than just the “employee portion” referenced above. Contact ZRC to learn more.If you are no longer employed, consider rolling your 401(k) account into an IRA.
  2. Max out your IRA and/or Roth IRA contributions. For those over 72, be sure to take your Required Minimum Distributions (RMDs) from IRAs and 401Ks. One of the most common questions we are asked about required minimum distributions is, “Do I have to spend the money?”The answer is “No.” If you don’t need the money, just transfer it into your taxable brokerage account and reinvest it. You can also gift all or a part of your RMD. You don’t get a deduction for it, but you don’t have to pay income taxes on it either. Another frequent question is “Will a Roth Conversion count towards my RMD?” The answer is “No.” Whatever you convert to a Roth IRA doesn’t count towards your RMD.
  3. Sell losers in taxable accounts to save on taxes. In investment speak, we call this “Tax-Loss Harvesting” – which is selling a perfectly good investment that happens to be currently worth less than what you originally paid for it. In doing so, you generate a loss which you can use to offset taxes on current or future gains. At the same time, steer clear of the IRS’s Wash-Sale Rule and purchase a similar (but not identical) investment, so that you are not out of the market.
  4. Establish or tune-up your Emergency Fund. Our typical suggestion is to maintain funds to cover 6-9 months of living expenses in the form of liquid assets such as a money market fund or conservative bond fund (one that doesn’t own a lot of longer maturity bonds or any junk bonds). Volatility of income and job security are also factors that would need to be considered when creating your Emergency Fund.
  5. Online and Cyber Security: Change your passwords at least every six months. Be aware of suspicious phone calls, emails, and texts asking you to send money or disclose personal information. If a service rep calls you, hang up and call back using a known phone number. Never share sensitive information or conduct business via email, as accounts are often compromised. Beware of phishing and malicious links. Urgent-sounding, legitimate-looking emails are intended to tempt you to accidentally disclose personal information or install malware. Don’t open links or attachments from unknown sources. Enter the web address in your browser. Check your email and account statements regularly for suspicious activity. Never enter confidential information in public areas. Assume someone is always watching. FDIC Consumer Assistance & Information:
  6. Rebalance accounts to maintain your original desired asset mix and risk profile. Rebalancing is the process of realigning your investment portfolio. It involves periodically buying or selling assets in a portfolio to maintain the original desired asset allocation.  For example, say an original target asset allocation was 50% stocks and 50% bonds. If the stocks performed well during the period, it could have increased the stock weighting of the portfolio to 60%. The investor may then decide to sell some stocks and buy bonds to get the portfolio back to the original target allocation of 50/50. This process follows the time tested investment rule of Selling High and Buying Low.
  7. Create family spending plans, budgets and automatic savings plans. The holidays can be a good time of the year to set some financial savings goals for the coming year, review progress from the past year, and plan for any large expenses in the coming year. Some people find it helpful to deposit a portion of their paycheck directly into their savings/brokerage accounts to avoid the temptation of having the money in their checking accounts. If you haven’t re-financed your home mortgage in several years, rates continue to be offered near historic lows.
  8. Talk to your loved ones about money. Over the years, ZRC Wealth Management has suggested numerous ways to bring up money matters at home, open a constructive dialogue, and teach positive spending and saving habits. We offer to be a confidential resource to adult children (whether it be new grads or new dads) that may not have the assets or income to afford professional advice. We can review their 401K plan and investment options, discuss employee benefits, company stock and options, debt, loans, etc.
  9. Update your estate plan and get qualified help if you are unsure of how to do it yourself. We are happy to provide a list of estate planning attorneys in your area.
  10. Review costs, contributions, and coverage for all your insurance policies. As your life changes, so will your insurance needs. The holidays are a good time to review your insurance policies as well as reconsidering Umbrella (excess liability) insurance if that coverage is not in place.
  11. Spend and review Health Savings Account (HSA) contributions (unused funds can be rolled-over to future years). HSA accounts can be combined with a self-directed brokerage account that allows a portion of the account to be invested. One Health Savings Account we recommend is Optum Bank which has partnered with Charles Schwab to offer the investment/brokerage account.
  12. Review your gifting plans to family members and/or charitable organizations for tax purposes. Whenever possible, gift appreciated securities that have long-term capital gains. In 2021 you can gift up to $15,000 per-person to friends and family members. And if you’re married, you can gift up to $30,000 to individuals, and that’s without incurring any type of gift-tax consequences.
  13. Make any planned 529 college savings contributions. There are several good plans out there. The one that ZRC Wealth Management recommends the most is the Utah Educational Savings Plan at
  14. Make sure you are not drawing down your investment assets too quickly. Suitable withdrawal rates vary depending upon age, investment mix, and a whole host of other factors.
  15. When in doubt, seek professional advice. Make it your New Year’s resolution to contact an independent financial advisor and Certified Financial Planner™ professional. Remember, time is your most valuable asset, so don’t wait!