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5 Year-End Planning Tips for 2018

With 2018 coming to a close, we wanted to give a few tips to keep you ahead of the curve when it comes to year-end planning.

1. Max Out Your 401(k)

If you are currently aiming to maximize your 401(k) contribution for 2018, double check your rate of contribution to ensure that you will hit $18,500 by the end of the year. If you’re already maximizing your 401(k), make sure to set a reminder in January to increase your contribution to meet the $19,000 max for 2019. 

2. Tax-Loss Harvest Taxable Accounts

The past few months have been rough across all markets, leaving many with negative returns for the quarter. If your taxable accounts are in the negative for 2018, you can take advantage of this strategy by selling a fund or stock at a loss, and quickly repurchasing a similar fund or stock, thereby “locking in” those losses. You can use those losses to offset any realized capital gains in addition to using up to $3,000 of taxable account losses to offset earned income this year. You can continue to use up to $3,000 per year to offset income in the future if you lock in a great enough loss.

3. Make a Donation

The end of the year is a great time to make a charitable donation. If you intend to report a high income or have positions with significant capital gains this year, consider donating to a cause you’re passionate about through your Individual or Joint account. This is a great way to help others while also saving on taxes.

4. Review Your Emergency Fund

Look back on 2018 and consider how your emergency fund worked for you. If you felt like you were tight on cash, perhaps it’s time to increase the emergency fund balance. If you felt that you had too much in your emergency fund, perhaps it’s time to invest a greater amount into the market.

5. Review Your Goals

At Thrive, we make sure to review your goals at least once per year. The end of the year is a great time to reflect on goals and accomplishments, financial or not, and set new ones for the upcoming year. If your financial situation or goals have changed, please don’t hesitate to give us a call.