With the end of the year fast approaching, now is a good time to review any last-minute financial planning to-dos. Here are six financial planning moves that, if appropriate for your circumstances, you will need to implement before year-end.

young woman looking at laptop and writing on notepad

Image source: Getty Images.

1. Charitable contributions

There are many ways to give to charity, with cash being the least tax-advantaged way to give. If you want to give appreciated stock or gift an IRA required minimum distribution, now is the time. If you need more time to decide on a charity, you can also gift appreciated stock to a donor advised fund (DAF). With a DAF, you receive the tax deduction in this year for any securities you contribute, but you can decide later -- say, next year -- which charities receive the funds. A DAF is also a great way to organize your gifts into one central place -- your accountant will appreciate that!

2. Tax-loss harvesting 

There is a silver lining to the market's sell-off, and that's the opportunity to harvest losses to offset any gains you had elsewhere. If you sold a stock earlier in the year for more than the price at which you bought it, then you'll owe capital gains taxes on your profit. Luckily, you can use a loss on another stock you sold to offset that gain and thus the tax you owe. For example, if you have a $4,000 gain, then a $4,000 loss elsewhere will negate that gain, so there is no tax due on the profit.

You can also use up to $3,000 in losses to offset ordinary income, so if your income is $100,000 and you sell a stock for a loss of $3,000, then your taxable income for the year is $97,000. If you have losses that you can't use -- for instance, if your losses are greater than your gains -- the IRS allows you to carry forward losses on your federal tax return to the following year. For example, if you have $10,000 in losses and use $3,000 to offset your $100,000 income, then the remaining $7,000 loss is available to offset any gains next year. When next year comes around and you sell a stock for a gain, you then can offset that gain with the $7,000 loss from last year.

You'll want to be aware of the wash sale rule, which prohibits you from claiming a loss if you buy the stock back within 30 days.

3. 529 contributions 

It's never too late to make contributions to 529 college savings accounts. A 529 is an account used to save for college, but it comes with two huge tax benefits: tax-free growth and tax-free distributions for qualified higher-education expenses like tuition, books, and fees. A recent tax law change now allows for tax-free distributions for private elementary or private high school, up to $10,000 per year. If you have a niece, nephew, or grandchild, you can contribute to their account as well. Finally, if you are expecting a child or know someone who is, they can start a 529 now and name the beneficiary themselves but change it later on when they have the child.

You can contribute throughout the year to a 529, but there is no tax deduction for contributions, unlike in a 401(k). However, there are annual contribution limits that vary by plan. Remember, it's generally best to start saving early when it comes to college tuition!


Generally, you need to spend the funds in a flexible savings account (FSA) by the end of the plan year, but there are exceptions. For instance there may be a "carryover" or "grace period" depending on the FSA plan; it's best to check with your employer. If your plan doesn't allow for contributions to carry over to the next year, then you'll want to try to get in all of your doctor or dental visits before year-end or consider pre-ordering any medical prescriptions. Eyeglass prescriptions, including prescription sunglasses, are eligible FSA expenses as well.

Balances in health savings accounts (HSAs), however, can be rolled over to the following year. The contribution deadline for HSAs is the April tax deadline, without extensions, so there is still time to fund the account and have the contribution count toward this year's taxes. There is also a catch-up contribution provision for HSAs: If you are over 55, you can contribute an extra $1,000. Yes, there are benefits to getting older!

5. Fund retirement plans

There is still time to max out your workplace 401(k). For 2018, you can contribute $18,500 or, if you're over age 50, an additional $6,000 for a total contribution of $24,500. Meanwhile, the deadline to contribute to IRAs and SEP IRAs and still have it count against this year's taxable income is the April tax deadline of next year -- good news for procrastinators.

6. Required minimum distributions (RMDs)

In general, if you are over age 70 1/2, you are required to take a minimum distribution from your retirement account each year. This includes an IRA (traditional, not Roth), a SEP-IRA and, if you're not still employed, your 401(k).

The penalty for skipping an RMD is steep: 50% of the amount you were supposed to withdraw but didn't. For example, if you were supposed to take a $4,000 RMD and forgot, you still have to take the $4,000 RMD, but the penalty is $2,000 -- ouch! Also, double-check any IRAs you inherited from deceased family members, as you may have to take an RMD from those, too.