It's not too soon for end-of-year financial moves


Last updated 10/16/2019 at 11:51am

FALLBROOK – There are still a couple of months until 2019 draws to a close, but it’s not too early to make some end-of-the-year financial moves. In fact, it may be a good idea to take some of these steps sooner rather than later.

Here are a few suggestions.

Boost those 401(k) contributions. Many people might not usually contribute the maximum amount to their 401(k), which, in 2019 is $19,000, or $25,000 if they’re 50 or older. Employees should ask their employer if they can increase their 401(k) contributions in 2019, and if they receive a bonus before the year ends, they may be able to use that toward their 401(k), too.

Add to that individual retirement account. Investors have until April 15, 2020, to contribute to an IRA for the 2019 tax year, but the more that can be put in now and over the next few months, the less they’ll have to come up with in a hurry at the filing deadline. For 2019, investors can put up to $6,000 in their IRA, or $7,000 if they’re 50 or older.

Review the investment portfolio. It’s always a good idea to review an investment portfolio at least once a year, and now is as good a time as any. But don’t make any judgments based solely on the results over the past 10 months. Instead, look carefully at how the portfolio is constructed. Is it still properly diversified, or has it become overweighted in some areas? Does it still fit personal risk tolerances, or is it causing undue worrying about short-term price swings? These are the types of factors that might lead an investor to make some changes, possibly with the help of a financial professional.

Don’t forget about the required minimum distributions. Once a senior turns 70 1/2, they generally need to start taking withdrawals – the technical term is “required minimum distributions” or RMDs – from a traditional IRA and a 401(k) or similar plan. After the first year in which a senior takes these RMDs, they must take them by the end of each year thereafter. If they don’t withdraw at least the minimum amount as calculated based on their age, account balance and other factors, they face a penalty of 50% of what they should have taken out – a potential loss of thousands of dollars. So, take those RMDs before Dec. 31. The financial services provider that administers the IRA or 401(k) can help them determine the amount they must withdraw.

Think about next year’s opportunities. It happens to almost everyone: A year has passed, and they haven’t taken the actions they had planned. So, everyone should start thinking now about what they want to do in 2020 from a financial standpoint. Can they afford to ratchet up their investments in their retirement plans? If they have children or grandchildren, have they started saving for college? Have they considered ways to protect their financial independence if they ever need some type of long-term care, such as an extended nursing home stay? If these or other items are on the financial to-do list, start planning now to get them done next year.

Time goes quickly – so don’t get left behind without having taken the steps to keep moving toward those financial goals.

Edward Jones financial adviser Brian Schrock is located at 1434 S. Mission Road, Suite B, in Fallbrook. For more information, call (760) 731-3234.

This article was written by Edward Jones for use by local Edward Jones financial advisers.

Submitted by Edward Jones.


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