Time to start Year-End Planning

  by Tyler Curtis

by Jesse Anderson, CFA

The last few months of the year are always busy – holidays, travel, time with friends and family.  My recommendation: knock out your Family CFO year-end tasks before you get caught up in all the rush.  If you start now, you will have one less thing to worry about.  Here is a list to help you get started:

Review your life/financial plan – It is a well-known belief that writing down your goals will help you be more successful at achieving them.  I believe the exact same thing is true with a budget and financial plan.  We’ve created the perfect tool to help you get started: our My Financial Plan web application.

For an even more in depth education and plan, you could attend our Step-by-Step Retirement Planning course in December or use our fee-only financial planning services.  If planning has never been your thing, we would be happy to help.

Max out retirement plan contributions – if you haven’t contributed the maximum amount to tax-advantaged retirement accounts, you still have a little bit of time left. Contribution limits for 2011 are as follows:




IRAs (Roth and Traditional)



401(K) and 403(b)








Remember, you can’t invest what you don’t save and the most advantageous way to save money for retirement is almost always in tax-advantaged retirement accounts.  Also, some GOOD NEWS:  Many of these contribution limitations will increase in 2012.

                *Annual contribution cannot exceed the lesser of 25% of compensation or $49,000

Rebalance investment accounts – This should be an annual process many investors completely ignore.   This involves bringing your investment accounts back in line with your target asset allocation.  Don’t forget about your 401(k) or company sponsored retirement plan.  Many employees go through the initial investment selection process and don’t look at it again for many years.

If you have questions about allocating an account where your choices are limited, you should check out our free, 401(k) course.   If you have lost hope in your current approach or do not have one, now is a great time to register for the next Snider Investment Method Workshop.

Tax loss harvesting – Tax loss harvesting is selling assets that have declined in value and using the losses to offset capital gains, either this year or in future years. This is only applicable to taxable accounts, not tax-deferred accounts such as IRAs, and may or may not be appropriate given the specifics of your situation.

If you have investable assets that may be candidates for tax loss harvesting, hopefully you have already discussed the situation with your tax or financial professional.  The assets must be sold by December 31 to count the losses in the 2011 tax year.

Here are detailed instructions for tax-loss harvesting in Snider Method accounts.  If you need any help, please be sure and give us a call.

Consider converting some IRA money to Roth – There is no longer an income limit on converting traditional IRAs to Roth IRAs. This is a benefit for higher income individuals who were previously shut out of the benefits of Roth IRAs.

Tax law is not for the faint of heart and these conversions can have significant tax implications so it should not be done without a thorough understanding of the rules and the implications.

The fact is our tax system is a mess, and no one knows what it will look like in the future.  We think the right approach is to think in terms of a tax diversification strategy. That way, no matter what happens in the future, you preserve flexibility and benefits.  This means keeping funds in each of three types of accounts:  Tax Deferred accounts (Ex. Traditional IRAs), Tax Free Roth accounts (Ex. Roth IRAs), and Taxable accounts (Ex. Individual, Joint, & Trusts).  Tax diversification will give investors choices in the future when income is needed and tax situations are known.

There are many things that will need done before year-end.  These are just a few planning ideas that can be done in advance so that you aren’t scrambling in the last few days of the year.

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