November is a pivotal month for financial planning. An opportunity to measure against financial goals, make final strategic decisions for tax year 2024, and prepare for the upcoming year. 

Wait until December, you risk falling into the apathy and distractions common from Thanksgiving to the New Year. Do you want that for your finances?

Here are key financial planning topics to consider now.

Review Your Planning Goals.

Take stock of your progress: have you met your savings targets? Made headway on debt repayments? Improve upon experience spending? Expand investing to asset allocation? This review can help identify areas to accelerate efforts before the year ends or be of greater priority in 2025. 

Tax Planning Strategies.

Does Roth Conversion or switching 401(k) contributions to Roth make sense? 

If doing Roth Conversion, what’s your expected Federal tax bracket and how much to convert to ensure you’re not bumping up a level or two?

Do you or a grandparent want to gift more than $18,000 to a child’s 529 Plan? 

If self-employed and want to open a Solo 401(k) plan, it must be done by December 31. Know that isn’t required until April tax filing deadline.

Recall 2017 Tax Cuts and Jobs Act lowering federal tax brackets will expire end of 2025. Current % will revert back (%): 12% (15%), 22% (25%), 24% (28%), 32% (33%), 35% (35%) and 37% (39.6%). Furthermore, the Standard Deduction $ amount for tax returns nearly doubled, it too reverts. Are there circumstances to plan for splitting realized gains over 2024 and 2025?  

Open Enrollment for Work Benefits.

Does your current health plan meet you and/or your family’s health and financial well-being? Does FSA or HSA make sense? If so, how much to contribute? 

Should you utilize supplemental Life or AD&D insurance? Are you opting into long-term disability insurance? 

Are you enrolling in dependent care and/or transportation flex spending accounts?  

Use your Medical Flex Spending Account (FSA). 

Unlike Health Savings Accounts (HSA) that rollover each year to accumulate, FSA is a “use it or lose it” benefit program. Some allow ~$500 carried the following year, others $0. If you’re low on qualified medical expenses, schedule elective appointments, renew prescriptions and/or spend on wellness. Don’t spend New Year’s Eve panic shopping in CVS. 

Evaluate Investment Portfolios.

Assess your asset allocation, then rebalance and/or tax-loss harvest, if necessary. Remember, asset allocation is different from diversification. Owning a S&P 500 Index fund is diversification, as it owns 500 largest U.S. companies, but it’s not an asset allocation model. Ensure asset classes are near their targets. 

Nearing retirement or have major life changes requiring funds? Identify source of funds, develop a tax-efficient distribution strategy and allocate remaining long-term assets to grow over time relative to need, not greed or fear. Meaning your asset allocation may (and likely should be) different within taxable accounts versus 401(k), 403(b), pre-tax IRA accounts versus Roth IRA, HSA accounts.  

Don’t Forget Your RMD. 

For 2024, the age for Required Minimum Distributions (RMDs) from retirement accounts is 73, up from 72 due to changes enacted by the SECURE 2.0 Act.

Also new, per finalized IRS regulations, Inherited IRAs from a non-spouse (i.e. parent) in 2020 or later where the deceased was taking RMDs, then you must also take RMDs within the 10-Year Rule. If previous years were missed, the IRS will not penalize, however they will after December 31, 2025.   

Conclusion.

November is a month of reflection, giving thanks and preparation in the realm of financial planning. If feeling overwhelmed, connect with your Certified Financial Planner to finish the year strong and set a solid foundation for a prosperous 2025.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Glenn Brown is a Holliston resident and owner of PlanDynamic, LLC, www.PlanDynamic.com. Glenn is a fee-only Certified Financial Planner™ helping motivated people take control of their planning and investing, so they can balance kids, aging parents and financial independence.

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