End of the Year Financial Checklist

Hello!

It seems like a long time since I have written a blog post. As you know, we recently launched our podcast- Finding Financial Freedom with The Frugal Physician.  If you haven’t checked it out yet, please do!  Start at episode 1- the first few episodes lay down the foundation and then we dive into expert interviews in the subsequent episodes.  I have been concentrating on getting the podcast up and running recently, but I am excited to get back to writing here.  

Listen to the audio version below!

My family and I just got back from a wonderful trip to Spain.  More on that later.  Now that we’re back, it’s time to get to work on the end-of-the-year financial tasks.  As the year is wrapping up, it’s time also to make sure we have taken advantage of all the financial tools we have on hand.  So here’s my to-do list!

1. Make sure all employee retirement accounts are maxed out. 

• 401k/403b- The contribution limit for 401k’s in 2023 is $22,500  for employee contributions.  Since I changed employers this year, I need to make sure everything is maxed out for the year manually.

• Backdoor Roth IRA contributions- This is the time to make sure the contributions and conversions are done and are maxed out for the year AND are invested appropriately (it’s easy to forget to go back in and buy investments!). 

• 2023 contribution limit is $6500. 

• 2024 contribution limit is $7000.

2. Make sure the Health Savings Account (HSA) is maxed out.  Remember the HSA is triple tax-advantaged- the money doesn’t get taxed on contribution, growth doesn’t get taxed, and the withdrawals aren’t taxed as long as they are used for healthcare expenses.

• 2023 contribution limit for family coverage is $7,750.

• 2024 contribution limit for family coverage is $8,300.

3. Make sure all claims are made from the dependent care Flexible Spending Account (FSA).  We use the dependent care FSA to save for childcare expenses.  Unlike the HSA, the FSA funds do not roll over (except a small amount).  So, we only contribute what we need, cash flow the expenses throughout the year, and then take those funds out at the end of the year.  This is our way of saving for Christmas expenditures.  

4. Do end-of-the-year accounting for the businesses and pay vendors.  Part of the fun of owning and running this business is that I get to hire who I want.  I have hired my kids as models, and they have even contributed voice acting to the podcast (see the disclaimer at the end of each episode).  The kids are paid for their efforts and contributions are made to their Roth IRAs.  Part of that process is also filing the appropriate paperwork to make sure they have their modeling permits up to date with New York State.   This paperwork includes a Health Statement form from their pediatrician and a form from their school that attests that they are in good standing and getting the appropriate education.  While this is somewhat of a pain, it’s worth it to make sure they are compensated appropriately.  The many years of compounding in their IRAs will be a very powerful tool for their future retirement.  Also, Josh and I also need to get the end-of-the-year accounting done for our rental properties and corresponding businesses. 

5. Make sure all credit card benefits are maxed out.  A lot of the credit cards we use turn over their benefits at the end of the year.  So this year, we made sure to take advantage of the Global entry credits to get the kids global entry (Josh and I already have it).  Here are some other credits that we need to make sure we maximize:

• American Express Platinum Card- $240 Entertainment Credit, $200 Uber cash, $200 Hotel Credit, $100 Saks Credit

• Chase Sapphire Reserve- $300 travel credit

• Marriott Bonvoy Brilliant Card- $300 dining credit (max $25/month)

6. Touch base with the accountant about charitable donations.  I already did this and as it turns out, even though my husband and I patronized the arts this year with a large donation to our local performing arts center, thanks to the large standard deduction, it still doesn’t move the needle toward itemizing for us this year.  But, it’s still nice to support our favorite charity.  It’s a good idea to check in with the accountant to see if a last-minute charitable donation may help you move the needle in your case.  

7. Tax Loss Harvesting.  As the year comes to an end, it’s important to harvest any tax losses if they are available.  Remember when we tax loss harvest, we sell lots that have a loss and buy similar but not identical funds back (not the same CUSIP number).  These losses can then be used to offset our active income up to $3000 a year (the rest can be rolled over to subsequent years).  

8. Rebalance the portfolio and reassess goals.  Along with harvesting tax losses, Josh and I will sit down and assess the asset allocation in our portfolio.  If the allocation is off the target we set in our financial plan, we’ll rebalance using new contributions next year.  We also need to sit down and go over our investor policy statement.  We use this time to assess how we’re doing and if we need to make any changes going forward.  

9. Reassess insurance needs.  The end of the year is a good time to reassess whether we have enough insurances in place.  Since I changed jobs, I’ll have to make sure to run my current disability coverage by my broker again and make sure I’m covered in the best way possible.

10. Use up CME and paid leave days.  If you have CME and paid leave that doesn’t roll over to the next year, make sure to use them up.

Phew! 

Well, now that I’ve made this list, I better get to work making sure everything is done. Do you have other things on your to-do list? Please share in the comments below.  

Till next time.

Stay frugal, ya’ll!

Disha

*All contribution limits cited are for those under 50.