Give YOURSELF a Gift this Year: Check Out Our Year-End Checklist for Feds

Written By: Matthew Kramer

As the year comes to a close, now is the perfect time to take stock of your financial situation and set the stage for a successful year ahead. Whether you’re building wealth, preparing for retirement, or managing your family’s needs, an end-of-year financial review can help you stay on track and identify opportunities to optimize your finances. From tax-saving strategies to investment adjustments, now is the time to make critical decisions that can have a lasting impact. With a comprehensive checklist—and guidance from trusted professionals like attorneys, financial planners, and accountants—you can confidently wrap up this year and enter the next with a solid financial foundation.

Optimize Tax Strategies

- Review taxable income:
  - Ensure it aligns with your tax bracket and overall goals.
  - Consider deferring income or accelerating deductions if you’re close to a higher bracket.
  - Consider contributing to Roth TSP and IRAs if you are in a lower tax bracket or have sizeable traditional TSP/IRA balances.
- Maximize retirement contributions for 2024:
  - TSP: $23,000 ($30,000 if 50+)
  - IRA: $7,000 ($8,000 if 50+)
  - HSA: $4,150 ($8,300 if you have family coverage, plus additional $1,000 if 55+)
  - FSA: $3,200
  - DCFSA: $2,500 ($5,000 if married filing a joint tax return)
- Prepare to maximize the same accounts for 2025:
  - TSP: $23,500 ($31,000 if 50+ or $34,750 if 60-63)
  - IRA: $7,000 ($8,000 if 50+)
  - HSA: $4,300 ($8,550 if you have family coverage, plus additional $1,000 if 55+)
  - FSA: $3,300
  - DCFSA: $2,500 ($5,000 if married filing a joint tax return)
- Utilize tax credits:
  - Check eligibility for tax credits such as: Saver’s Credit, Child Tax Credit, or Education Tax Credits
- Charitable giving:
  - Donate appreciated assets or cash for tax deductions.
  - Consider using a Qualified Charitable Distribution (QCD) if 70½+.
  - Accelerate gifting directly or utilizing a Donor-Advised Fund (DAF) in higher income years.
  - Consider utilizing charitable trusts if you plan to leave substantial gifts or bequests to charitable organizations.

Roth Conversions

- Take advantage of opportunities to convert pre-tax funds to tax-free funds by paying taxes upfront.
- Be mindful of your income and how far you are from rising to the next tax bracket or Medicare IRMAA bracket.

Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax- free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

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Fine-Tune Investments

Rebalance your portfolio: Align investments with your goals and risk profile.
Harvest capital losses: Offset gains to reduce taxable income and/or carry forward to future years.
Harvest capital gains: Take investment gains in lower income years or to offset deductions.
Plan for RMDs:
- Individuals aged 72+ should ensure compliance to avoid penalties.
- Consider QCDs if charitably inclined to reduce RMD burden and taxes.
- Owners of Inherited IRAs may need to take RMDs earlier than age 73+:
  - 2024 is the last year that you have the option to skip your RMD under SECURE Act 2.0.
  - In 2025, you must take your RMD to avoid potential IRS penalties.
Set goals for impact investing: For those prioritizing ESG (Environmental, Social, Governance) values.
Confirm Investment Strategy: Ensure your investments are aligned to a well vetted investment philosophy. Evaluate personal preferences in investments such as prioritizing Environmental, Social, Governance values.

Address Debt and Cash Flow

Tackle high-interest debt: Strategize to pay down or refinance outstanding balances.
Review cash flow: Adjust for changes in income, expenses, or priorities.
Set emergency fund goals: Aim for 3–6 months’ worth of expenses the funds should be in a money market, or high-yield FDIC insured savings account.
Plan for major purchases: Such as a new car or house, and ensure you have sufficient cash on hand as pulling from investments in a down market can lock in losses.
- Withdrawal: Pull funds from savings and retirement accounts to supplement cash flow.
  - Important: Consider tax implications, required distributions, early withdrawal penalties, and overall financial health when developing withdrawal strategies.

Evaluate Federal Benefits and Insurance

Maximize open enrollment benefits:
- Adjust health, dental, or vision coverage to fit your family’s needs.
- Consider switching to a high deductible health plan to take advantage of a Health Savings Account. (HSA)
- Utilize Dependent Care FSAs or other workplace perks.
Review life and disability insurance: Ensure sufficient coverage to protect dependents.
Review Long-Term Care Insurance: Evaluate coverage amounts, types of care covered, length of coverage, premiums, and inflation protection.
Prepare for long-term care: Consider purchasing a policy if nearing retirement.
Use FSA and DCFSA funds prior to deadline. (2½ Months after year-end)
Retrieve your most recent SF-50 and review for accuracy: position title, grade, step, pay plan, occupational code, tenure, service computation date, name, social security number, date of birth, etc.

These policies have exclusions and/or limitations. The cost and availability of life and Long Term Care insurance depend on factors such as age, health and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of insurance. Life insurance policies commonly have mortality and expense charges. In addition if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Guarantees are based on the claims paying ability of the insurance company.

Enhance Estate Planning

Review beneficiaries: Update accounts and policies for any life changes.
Revisit wills and trusts: Make sure they reflect your current wishes.
Utilize annual gifting limits:
- In 2024, you can gift up to $18,000 ($36,000 if married) per individual without tax implications.
- In 2025, the annual gifting limit will increase to $19,000 ($38,000 if married).

Plan for Education and Family

Contribute to education savings:
- Maximize contributions to 529 Plans.
- Explore employer-sponsored education benefits, if available.
- Ensure you are taking advantage of state tax deductible contributions
Prepare for upcoming family milestones: Weddings, births, or tuition costs.
Evaluate gifts to minor investment accounts such as UGMA and UTMA.

Strengthen Your Financial Future

Learn about Your Benefits: Confirm you are taking advantage of all benefits that are available and beneficial for you.

Take advantage of our Federal benefit webinars for Feds

Set retirement goals: Evaluate retirement plan progress and adjust contributions.
Plan for transitions:
- For service members or veterans: pptimize military and/or federal pension benefits.
- Evaluate buying-back military, or peace corps time.
- Consider suspending FEHB in lieu of Tricare in retirement.
Assess housing plans: Refinance, pay down mortgage, or prepare for a new purchase.

Organize and Document

Prepare for tax filing:
- Collect receipts, W-2s, 1099s, and other documents.
- Track charitable donations and deductible expenses.
Backup financial records: Use secure tools for peace of mind.

As the year winds down, taking a proactive approach to your finances ensures you're set up for success in the coming year. This end-of-year checklist covers a wide range of considerations—from optimizing taxes and investments to ensuring your family and future goals are protected. However, financial planning can be complex, and the best strategies are often tailored to your unique circumstances.

Conclusion

If you’re unsure about any aspect of your financial plan, don’t hesitate to reach out to trusted professionals for guidance:

Attorneys: To review or update estate planning documents, such as wills, trusts, and power of attorney.
Financial Planners: To align your investments, retirement plans, and overall goals with your unique needs.
Accountants: To ensure your tax strategies are efficient and compliant with current regulations.

Remember, planning today creates confidence for tomorrow. If you need personalized support, reach out to your trusted advisors, or schedule a consultation with us at Serving Those Who Serve. Together, we’ll craft a financial plan that empowers you to focus on what matters most.

Let’s plan for your success—contact us today!

Written By: Matthew Kramer

The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **