Consider these year-end financial moves

Long version

We’re nearing the end of 2020 – and for many of us, it will be a relief to turn the calendar page on this challenging year. However, we’ve still got a few weeks left, which means you have time to make some year-end financial moves that may work in your favor.

Here are a few suggestions:

  • Add to your IRA
    For the 2020 tax year, you can put in up to $6,000 to your traditional or Roth IRA, or $7,000 if you’re 50 or older. If you haven’t reached this limit, consider adding some money. You actually have until April 15, 2021, to contribute to your IRA for 2020, but the sooner you put the money in, the quicker it can go to work for you. Plus, if you have to pay taxes in April, you’ll be less likely to contribute to your IRA then.
  • Make an extra 401(k) payment
    If it’s allowed by your employer, put in a little extra to your 401(k) or similar retirement plan. And if your salary goes up next year, increase your regular contributions.
  • See your tax advisor
    It’s possible that you could improve your tax situation by making some investment-related moves. For example, if you sold some investments whose value has increased, you could incur capital gains taxes. To offset these gains, you could sell other investments that have lost value, assuming these investments are no longer essential to your financial strategy. Your tax advisor can evaluate this type of move, along with others, to determine those that may be appropriate for your situation.
  • Review your investment mix
    As you consider your portfolio, think about the events of these past 12 months and how you responded to them. When COVID-19 hit early in the year, and the financial markets plunged, did you find yourself worrying constantly about the losses you were taking, even though they were just on “paper” at that point? Did you even sell investments to “cut your losses” without waiting for a market recovery? If so, you might want to consult with a financial professional to determine if your investment mix is still appropriate for your goals and risk tolerance, or if you need to make some changes.
  • Evaluate your need for retirement plan withdrawals
    If you are 72 or older, you must start taking withdrawals – technically called required minimum distributions, or RMDs – from your traditional IRA and your 401(k) or similar retirement plan. Typically, you must take these RMDs by December 31 every year. However, the Coronavirus Aid, Relief, and Economic Stimulus (CARES) Act suspended, or waived, all RMDs due in 2020. If you’re in this age group, but you don’t need the money, you can let your retirement accounts continue growing on a tax-deferred basis.
  • Think about the future
    Are you saving enough for your children’s college education? Are you still on track toward the retirement lifestyle you’ve envisioned? Or have your retirement plans changed as a result of the pandemic? All of these issues can affect your investment strategies, so you’ll want to think carefully about what decisions you may need to make.

Looking back – and ahead – can help you make the moves to end 2020 on a positive note and start 2021 on the right foot.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Edward Jones, Member SIPC

Number of words: 539

Short /radio version:

PSA: Consider These Year-end Financial Moves

TBA: Dec. 7, 2020

Words: 178 (excluding FA’s name, address/phone number)

We’re nearing the end of 2020, but you’ve still got time to make some year-end financial moves.

For starters, add to your IRA. You actually have until April 15 to contribute to your IRA for the 2020 tax year, but the sooner you put the money in, the quicker it can work for you.

Also, if your employer allows it, put in a little extra to your 401(k) or similar retirement plan.

If you’re 72 or older, you don’t have to take withdrawals from your IRA or 401(k) that would normally be required by year-end, due to the economic stimulus legislation. If you don’t need the money, you can let your retirement accounts continue growing on a tax-deferred basis.

Here’s another suggestion: Review your investment mix to see if it’s still appropriate for your goals and risk tolerance.

Finally, see your tax advisor. You might be able to make some investment-related moves that can improve your tax situation.

Taking these steps can help you close out 2020 on a positive note – and start 2021 on the right foot.

This is (FA’s NAME), your Edward Jones financial advisor at (Branch address or phone #).

Member SIPC

Number of words: 178