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5 Common Financial Tasks You Should Start Doing Now

5 Common Financial Tasks You Should Start Doing Now

| January 14, 2022

It’s a New Year! Here are 5 tasks to tackle so you start 2022 on the right financial footing:

Here are some common items that we advise our clients to keep in mind as they review their finances…

1] Maximizing retirement plan contributions. Regular contributions to your retirement plans are a powerful savings tool. Each year your plan has a contribution limit. Many retirement plan contributions also reduce your taxable income for the year. Have you been maximizing your contributions? Remember, you still have until April 15th to make contributions to your IRA accounts. Check to see where you are at with your contributions and see how you can maximize your retirement savings.

2] Taking your Required Minimum Distribution (RMD). This applies to folks who are over 72 with a retirement plan account. You generally have to start taking distributions when you reach age 70 ½ but changes made by the SECURE Act mean that if your 70th birthday is July 1, 2019, or later, you don’t have to take withdrawals until age 72. After that, you MUST take your required minimum distribution each year or else you will have to pay a 50% excise tax on the amount not distributed as required! Make sure you're taking your RMDs out regularly this year to avoid penalties.

3] Organizing your charitable donations. Charitable donations can lower your tax bill when made to a qualified organization. This can include cash donations or property donations. Either way, you will need to maintain good records of the donations. And, guess what? If you have an RMD amount that you need to meet, you could make a qualified charitable distribution from your IRA to help satisfy that required distribution.

4] Evaluate your tax withholding. The IRS sent out a reminder that taxpayers should consider their tax withholding to see if it is still the appropriate amount. They reported that around 70% of taxpayers over withhold their taxes every year. You can use the IRS Tax Withholding Estimator to tailor the amount needed to withhold for taxes. This can be important especially if you had a change in jobs or faced an unexpected tax bill during the year to try to correct your withholding.

5] Revise your budget. Life goes on, and changes happen each year. Now is a great time to reflect on the last year, review what changed, and plan your goals for the rest of the year. The simple process of revising your budget can give you insight into how your financial needs have shifted and help you adjust.


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