Wealth management checklist

WEALTH MANAGEMENT CHECKLIST

INVESTMENT

1. Review investment portfolios and objectives.

Review investment portfolios to make sure they match your investment objectives with regard to growth and income objectives. It’s important to manage portfolio positions through buying and selling so that they stay in line with your investment objectives.

2. Diversify any concentrated positions.

We’d say you have a concentrated stock position if you have more than 10% of your total investment portfolio in a single stock or company. That can be risky when the market is volatile, so if this is the case for you, it’s important to work with your advisor to set up a long-term, tax-efficient sale plan.

3. Revisit your current income needs.

If you rely on your investment portfolio to partially or fully support your lifestyle, you’ll want to work with your advisor team to come up with an estimate of the cash flow your portfolio is expected to generate next year. If any other sources of income were disrupted last year, you might also want to talk with your financial advisor about modifying your investment objectivres.

4. Know what your money is doing.

Every dollar you invest makes an impact. If you don’t know the impact your money is making right now, ask your advisor to run a diagnostic of your portfolio to better understand how your investments are aligning with your values.

5. Look at offsetting capital gains with losses (4th quarter).

If you had portfolio capital gains and losses last year, you may be able to offset some or all of the gains with the losses, with the goal of reducing the amount you’ll owe in taxes for the previous year.

RETIREMENT

6. Maximize your 401(k) contributions.

The max contribution into your 401(k) for 2021 is $19,500 (or $26,000, if you’re 50 or older). Even if you don’t hit the max, your contributions are still important because they lower your taxable income for 2021. You have until December 31 to make 401(k) contributions. Also good to know: In 2022, the limit’s increasing by $1,000. If you want to keep maxing out, set a reminder to increase your contributions starting January 1.

7. Think about maximizing your IRA contributions.

You should think about an individual retirement account (aka IRA) contribution. The contribution limit for most IRAs in 2021 is $6,000 ($7,000 if you’re 50 or older). With IRAs, you have until Tax Day (April 15) to make the contribution, so you can assess your year-end financial situation before contributing if you like.

8. Review your beneficiary designations.

Beneficiary forms have often superseded wills and trust directives in court, and not updating them is a common (and potentially expensive) mistake. Review and update them each year!

9. Think about a Roth conversion.

With a Roth IRA conversion, you’ll transfer retirement funds from a traditional IRA or 401(k) account into a Roth account. Since a traditional account is tax-deferred while a Roth is tax-exempt, you’ll need to pay those deferred income taxes on the funds you convert. This strategy isn’t relevant every year. It tends to be most relevant in a year when you think your tax bracket will be lower — which means it might be better to pay taxes now than in retirement. The upside? When you withdraw your money in retirement, it’ll be tax free.

LEGACY

10. Revisit your strategic giving plan.

If you’re giving intentionally, rather than reactively, you can have a bigger impact on the things you care about most. We like the 80/20 rule, where you give 80% of your giving budget to those causes and organizations you’re deeply connected to, and reserve 20% of it for giving in reaction to requests and opportunities that come up.

11. Gift your gains.

If you’re donating an appreciated asset, like stock that has increased in value since you got it, donating it in kind may allow you to avoid the capital gains tax that you’d have had to pay if you sold it. That means you can donate the full value of the asset instead of a reduced, after-tax amount. Talk to your legal and tax pros to see if this applies to you.

12. Consider family gifting before year-end.

You won’t receive any sort of deduction for gifting to a family member, friend, or neighbor in need. That said, if the gift is under $15,000 ($30,000 for married couples), it won’t be subject to gift tax and doesn’t count toward your lifetime gift and estate tax limit. And that’s a per-recipient cap!

13. Think about upping your giving this year.

Usually, the deduction limit for charitable cash donation is 60% of your adjusted gross income. There’s a tool from the IRS to help you check to see if your donation is deductible, but you may still want to talk to your financial advisor and your legal and tax professionals about whether giving more is right for you.

Important Events and Milestones

14. Tell your advisor about any major life events.

Weddings or divorces, births and deaths, career changes, relocations … all of these could impact your spending and budgets — or the investment advice and recommendations that are made for you — so make sure you let your team know.

15. Review your estate and health documents.

Take a look at your will, healthcare power of attorney, advanced medical directive, and general power of attorney to make sure all names are up to date and they reflect your wishes.

16. Review your income tax withholding.

Talk to your tax professional to see if the amount you’re withholding still makes sense as you head into the new year.

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