Money Matters

Money Matters: A year-end financial checklist can help protect what you’ve earned

CorrespondentNovember 30, 2013 

Q. We’d like to make sure we’re in as good of a financial shape for future retirement as possible. We are married and in our early 30s, so we have time to get things in place as long as we are smart and know what to do. We are both expecting a modest bonus before year’s end. As the end of the year is approaching, do you have a checklist of financial tasks you could share?

A. I’m sure this won’t cover everything, but the following financial strategies may help you keep more of what you’ve earned in 2013 and plan for next year.

• Consider tax-loss harvesting if you have any investments in a taxable account that have lost value. The stock market has done well this year, but you still may have some losers in stock or bond holdings. Selling these before the end of the year will help offset any capital gains you may realize either through actual selling of stocks, bonds or funds or due to distributions from mutual funds. You can replace whatever you sell and still take the loss as long as you don’t violate the “wash sale” rule. This rule will eliminate the ability to use the loss if you repurchase substantially identical investments within 30 days before or after the sale. Losses can be used to offset gains dollar for dollar and up to $3,000 of income. Any unused losses can be carried forward until they are depleted or until death, whichever comes first.

• Make sure you have maxed out your tax-advantage retirement accounts by the end of the year. If you haven’t already done so, that may be a good use of your bonuses. 401(k) and 403(b) plans allow a maximum of $17,500 for 2013 with an additional $5,500 catch-up for those age 50 and over. The ability to contribute at this level depends on your income and plan contribution rules. Invest in a traditional or a Roth IRA, and you have until the 2013 tax filing date, but if the market continues to rise, investing earlier than later would be wise. The contribution limit is $5,500 or $6,500 if age 50 or over. There are income restrictions for deductible contributions to an IRA. For single filers, the deduction phase-out begins at $59,000 of modified adjusted gross income(no deduction allowed if over $69,000); it begins at $95,000 for those married filing jointly if both spouses are covered by a work retirement plan (no deduction if over $115,000) and $178,000 if only one spouse is covered by a work retirement plan (no deduction if over $188,000). For Roth IRAs, the phase-out begins at $112,000 for single filers (no contribution allowed if over $127,000) and $178,000 for those married filing jointly (no contribution allowed if over $188,000).

• If you have or know of future college students for whom you would like to help pay for college, make a contribution to a 529 account. The state tax deduction for contributions made to the NC 529 plan is scheduled to expire this year. If you want to obtain the deduction, your contribution must be received and processed before the end of the year. The deadline for the different methods of making a contribution can be found at or by calling 866-866-2362.

• Consider making charitable contributions before year’s end. If possible, bunch deductions into the current year and push income into next year if you think your tax bracket will be lower in 2014. Take advantage of the extension for the tax credits for energy efficient home improvements which were extended last year but are scheduled to expire after 2013.

Congratulations on your bonuses.

Holly Nicholson is a certified financial planner in Raleigh. She cannot answer every question. Reach her at or P.O. Box 97128, Raleigh, NC 27624

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