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  • Writer's pictureDr. Disha

My End Of The Year To-Do’s



Merry Christmas and Happy Holidays to my frugal family!

I want to take a minute to thank you for reading and being here.  

As the year comes to a close, a lot of us are scrambling to get our last-minute financial stuff done.  

Here is mine:

Max 529's

The deadline to contribute to 529’s and get a state tax deduction in NY is the end of the year.  In New York, we can deduct up to $10,000 from state income taxes married filing jointly for 529 contributions.  Seeing as we paid $16,521 in New York taxes last year when we didn’t contribute to 529’s, I’m hoping this will make a substantial difference in our tax bill for 2020.  


Drain FSA's:

FSA’s (Flexible Spending Account) have the downside of not rolling over (aside from $500).  We didn’t have to worry about not spending our dependent care FSA because our daycare expenses were so high pre-COVID.  But, since the pandemic, we haven’t sent the kids to daycare due to exposure risk.  Their grandma has been coming over to take care of them instead.  I did stop the contributions back in May, but I still had some money there.  Instead of losing it, my benefits administrator actually suggested I pay Grandma with that money– which I did!  Since she comes to our home, we can pay her without deducting FICA and Medicare taxes.   But, grandma will have to report the income on her taxes.  


Donate


The CARES act added a $300 charitable contribution “above the line” deduction this year.  Usually, charitable deductions only help the tax situation if someone is itemizing.  I spoke with my accountant and it doesn’t make sense for us to itemize this year.  However, thanks to this CARES act deduction, we can all still donate $300 and take a deduction for that.

Clear our pre-tax IRA

I made the mistake of rolling over a previous 401k into a rollover IRA a couple of years ago.  That limits my ability to do backdoor Roth contributions because it subjects me to the pro-rata rule.  So, finally after procrastinating for a whole year, I needed to roll over that money.  I decided to put it into my current employer 401k.  

Rolling over accounts could be a whole conversation in itself, maybe I’ll write a post about it.  My current employer wanted me to attach some paperwork from their side to the check, so I had to have Vanguard first mail me the check.   And then, I needed to mail the whole thing to them.  

To complicate matters, Vanguard first needs you to sell the assets manually and put them in the money market fund, prior to rolling it over.  This is an additional step that doesn’t exist at all the institutions.  So, be aware of that.  The last time I tried to do it, I didn’t do the manual selling first so only $6 dollars rolled over… oops.  To be clear, I just need to clear out the IRA’s by the end of the year.  I can still do the traditional IRA contribution and Roth conversion part between Jan and the tax filing deadline in April 2021.

Max All Accounts

Before the end of the year, I need to make sure we’re maxed in our 401k’s and HSA.  This is somewhat complicated by the fact that I switched jobs this year, so I need to take my contributions at the previous employer into account myself since my new job is not tracking that.  Once contributions are maxed, I need to update withholdings for next year.  

Do Business Accounting

It is very important for the TFP accounting to be done by the end of the year, so I’ve been working on that.   Our final profit determines how much we can put in the Solo 401k for the business.  

Rebalance the Portfolio

Last, but not least, when all the money is rolled over into the appropriate accounts, I need to make sure we are invested at my desired asset allocation of 60% domestic stock, 20% international stock, and 20% bonds across all our accounts.  That remains on the to-do list, as I’m still waiting on the rollovers to go through.  I use an excel file to keep track of all of it.  

I’m happy to say I’m done with most of this, except for the rebalancing.  I hope you’re getting the last few things on your checklist done, as well! 

Happy holidays and stay frugal!

Disha

What’s on your financial to-do list? Share below

Standard Disclaimer:  Not meant as individualized financial or medical advice.       

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