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Financial moves to make before 12/31


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Thought now would be a good moment to make this thread, financial advisors feel free to chime in with good info to prepare guys for end of year. What’s everyone goals? Keep holiday spending to a specific target? Max contribute to 401k/Roths etc? Would love to hear it and get some discussion going.
 

Have 3.5 months to meet max contribution for 401k for the year. I’ve never done it before, but I’m 35, so first time for everything and had no reason not to this year. Spent some of the year contributing nothing, some time at 10% now bumped it to 33% for this month to test out. Will probably go further. Spent a lot of the year slowly chipping away at a 25k debt from taking flight lessons during COVID cause YOLO and always wanted to learn that. Pretty sure IRA limits go until tax day 4/15 so wasn’t sure if it makes sense to include plans for that until after the new year.

Edited by StassneyHorn
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@StassneyHorn Experts may disagree, but I think you're wise RE: delaying (but NOT foregoing) Roth contributions in favor of tax deferred (401k) or tax deductible (HSA) prior to 12/31...espec if you are in that sweet-spot of being high enough income to meaningfully benefit from the short-term tax savings while still being eligible for the full Roth direct contribution limit of $7k.

My reasoning is based on the fact you can still contribute to "this year's" Roth (prior to the 4/15 deadline you mentioned) even after the clock runs out on 401k/HSA deadline and you file your completed year-end IRS return.  Therefore, if you anticipate a tax refund, filing taxes right away early in Jan/Feb is a slick way to parlay those credited funds toward your 2024 Roth limit (or get a head-start on 2025, since you have the either/or option between Jan 1 - April 15.

That said, I wouldn't go balls-out for 401k max limit if it comes at the expense of eventually topping off your entire Roth $7k limit before 4/15.  A healthy portfolio should possess a solid combination of tax-deferred and tax-free accounts, since they will both serve their own unique purposes as your income trajectory grows and/or eventually prep for retirement.

Also, I would not have guessed you were anywhere near 35....I pegged you at like 53 so take that for what you will.

Edited by Muny_Tex
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On personal front, my plan for end of year is to continue tradition of only having kids born in Q4 so we can optimize the full year Child Tax Credit before all the bullshit comes due.  I will also create a new 529 in new baby's name and drop a fat contribution before 12/31 to realize the immediate state income tax benefits (note: user name does not remotely check-out). 

I also am planning a mortgage re-finance within next 1-2 months (bought in Spring 2023 and expecting substantial rate improvement), and will leverage the incremental cash flow from the two "skipped payments" toward some end-of-year retirement plan targets.

 

Edited by Muny_Tex
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11 hours ago, Muny_Tex said:

On personal front, my plan for end of year is to continue tradition of only having kids born in Q4 so we can optimize the full year Child Tax Credit before all the bullshit comes due.  I will also create a new 529 in new baby's name and drop a fat contribution before 12/31 to realize the immediate state income tax benefits (note: user name does not remotely check-out). 

I also am planning a mortgage re-finance within next 1-2 months (bought in Spring 2023 and expecting substantial rate improvement), and will leverage the incremental cash flow from the two "skipped payments" toward some end-of-year retirement plan targets.

 

Our main lender has a 75bps refi incentive until 10/31 if you wanna take advantage of that. 

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  • 2 weeks later...

Is it possible to tell a company to stop giving me the employer contribution on HSA? I’ve got like one, maybe two more pay periods before I go over the yearly contribution limit. I already stopped my employee contribution for the year. I may have moonlighted for a bit and the other company contributed a stupid amount upfront. 

Edited by StassneyHorn
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On track this year as usual, and it always feels so good.  We have no debt this year and have had nothing to spend our money on, which is kinda nice. 

401k and HSA will hit perfectly with the remaining payroll checks left. 

Already contributed and then Backdoor Roth'd both of our IRAs.  

Emergency Savings is at the amount we want in an AMEX HYSA.

$1,000 a month goes into my Fidelity "play account" Brokerage for Stonks.

Any excess cash goes into VMSXX in our Vanguard Brokerage.  When it hits a certain limit, it gets 3-Fund-Bogle'd.  

Damn, it feels good to be a gangster...

 

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On 9/13/2024 at 8:54 PM, Texas St. Armadillos said:

If you have an HSA, max that out too.  I think the limit is $8k this year.

I’m not having enough withheld to get to $8k.  Are we allowed to make a 1-off contribution to get up to the cap?  Like literally look where I’m at on 12-31 and write a check for the shortfall?

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11 minutes ago, Parliament said:

I’m not having enough withheld to get to $8k.  Are we allowed to make a 1-off contribution to get up to the cap?  Like literally look where I’m at on 12-31 and write a check for the shortfall?

I would check with your HR team or Payroll team ASAP.   I'm not as knowledgeable as my benefits people (your mileage may vary).

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Posted (edited)
6 hours ago, Brisketexan said:

That this thread has made it this far without "acquire hookers and blow" just disappoints me.

I’m here now!! 
Great thread thanks for starting it I am 36 and grew up 0 knowledge of this shit. Do well I think and getting a significant raise next year. It’s already on the books, been doing 8% 401k with 4% match, hsa is almost done. Not “rich” like the rest of you assholes but always trying to learn this play the game stuff. Roth needs more but again I love hookers and blow

Edited by Zepol87
Edit because the next raise and promotion should put me at about 170k
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Posted (edited)

Yea looking at it with clearer eyes now, I’m absolute maxing 401k til end of year to get to 23k max, while paying off a remaining 7.5k debt. When new year starts I’m resetting the contribution to 0, and will pay off remainder of debt if there is any and contribute 7k total as fast as possible to Roth before 4/15 for previous year, then another 7k to Roth this year immediately before doing 401k full contribution again.

Im a big proponent of “get to 100k” as soon as possible in all accounts, before letting time do the rest of the compounding work and get full paychecks for individual investing.

 

…and then Thailand and Philippines for self instructed research.

Edited by StassneyHorn
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12 hours ago, Parliament said:

I’m not having enough withheld to get to $8k.  Are we allowed to make a 1-off contribution to get up to the cap?  Like literally look where I’m at on 12-31 and write a check for the shortfall?

 

12 hours ago, Texas St. Armadillos said:

I would check with your HR team or Payroll team ASAP.   I'm not as knowledgeable as my benefits people (your mileage may vary).

I was under the belief that you can make HSA contributions independent of your employer or paycheck but I'm neither a CPA nor HR rep. Somehow you will need to report this as tax-deferred on your 2024 tax return. I don't know if this is just you attesting to it, or if the financial HSA entity sends you a tax doc.

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15 hours ago, Zepol87 said:

I’m here now!! 
Great thread thanks for starting it I am 36 and grew up 0 knowledge of this shit. Do well I think and getting a significant raise next year. It’s already on the books, been doing 8% 401k with 4% match, hsa is almost done. Not “rich” like the rest of you assholes but always trying to learn this play the game stuff. Roth needs more but again I love hookers and blow

I’m only 6 years older than you, but I finally started maxing my 401k yearly at about 36 and wish I’d started at 26. 

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Sit down and let me tell you a story. I had a plan, had a could of people look at it, and with minor tweaks it was all good. I've hit level 1 max for almost 20 year, and that is making sure to get max employer match, there was a period of 10 years I hit the 401k max, then about 5 years ago I took a job that offered more life balance and that was great, but I didn't max the 401k. But I've always invested fairly aggressively, S&P 500, a couple of growth funds, little in bonds...and that has done well.

The plan was that I would continue to do contact consulting until 70, because a) it maxes or SS, 2) I really like most of the clients I've worked for. Mrs Fairway was going to with to 65, and get Medicare, draw her SS until I started to draw at which point she'd get an increase to 50% of mine. And we be set, even if we made it to 100.

The Mrs Fairway gets a cancer diagnosis (see the cancer thread), and she may be done working, I've shifted my contracts to someone else. And although we are "comfortable", there are a couple of financial unknowns, that can wait until we know where she is with the big C.

The moral is, didn't wait until later to start investing, pay your future self first because you may not get the choice about when you do contributing or when you will need to pull money out. 

Good luck, let time be your friend in inventing, and only speculate with a small % of portfolio. 

 

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I was under the belief that you can make HSA contributions independent of your employer or paycheck but I'm neither a CPA nor HR rep. Somehow you will need to report this as tax-deferred on your 2024 tax return. I don't know if this is just you attesting to it, or if the financial HSA entity sends you a tax doc.

You should be able to do this up until the filing date in April. I am not a tax professional but I have topped off my HSA in some years by making a deposit into the HSA via check or transfer.

There is a form you fill out that has how much your employer put in and how much you put in to reconcile who put in what. If you use something like TurboTax this is done as part of filling out your tax forms.
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4 hours ago, Texas Jeff said:

You should be able to do this up until the filing date in April. I am not a tax professional but I have topped off my HSA in some years by making a deposit into the HSA via check or transfer.

There is a form you fill out that has how much your employer put in and how much you put in to reconcile who put in what. If you use something like TurboTax this is done as part of filling out your tax forms.

OK, I looked at my return from last year.  This is on Form 8889, "Health Savings Accounts (HSAs)".

One line is for the amount you put in, one line is for the amount your employer put in.  There is some math there to figure out your max contribution.  If you don't have a high deductible health plan for the entire year then the amount you can put in is less.  "See the instructions", says the IRS, which is one of their favorite things to say.

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28 minutes ago, Texas Jeff said:

OK, I looked at my return from last year.  This is on Form 8889, "Health Savings Accounts (HSAs)".

One line is for the amount you put in, one line is for the amount your employer put in.  There is some math there to figure out your max contribution.  If you don't have a high deductible health plan for the entire year then the amount you can put in is less.  "See the instructions", says the IRS, which is one of their favorite things to say.

I believe the amount is prorated at the same percentage that you were covered for the HDHP for that year. 

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  • 3 weeks later...

If you can get to a HDHP and HSA while young and healthy then do it. Your health care expenses should be low if relatively healthy. You get over 50 yo then you may start to occur big chunks of health care expenses that could make your out of pocket in a HDHP pretty high and start to chip away at the advantages of having that HSA. This is especially true if the monthly cost of the HDHP is close to your cost for a more traditional HMO or PPO type plan.

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20 hours ago, Newdoc said:

If you can get to a HDHP and HSA while young and healthy then do it. Your health care expenses should be low if relatively healthy. You get over 50 yo then you may start to occur big chunks of health care expenses that could make your out of pocket in a HDHP pretty high and start to chip away at the advantages of having that HSA. This is especially true if the monthly cost of the HDHP is close to your cost for a more traditional HMO or PPO type plan.

This happened to me. I have a HDHP and HSA and needed physical therapy this year. It was somewhere close to $200 per visit. The therapist prescribed twice per week, and I countered with one with take home instructions. 

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1 hour ago, Nice Guy Eddie said:

This happened to me. I have a HDHP and HSA and needed physical therapy this year. It was somewhere close to $200 per visit. The therapist prescribed twice per week, and I countered with one with take home instructions. 

Yep, PT will put a hole in your health savings pretty quickly. HDHP used to be pretty economical and significantly less than traditional plans so the HSA made sense with it. With a little CR thrown in, the Affordable Health Care act made HDHPs cover so many things that the insurers have seen it fit to raise the rates just as much as other plans. They would rather you stay in a narrowed network with tightly controlled cost and authorizations for care. 

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Had 3 HSA accounts so finally got around to submit a rollover on one of them and stop eating fees. Looks like I’ll have to wait another 12 months after it lands in the other account, before I can roll that over into the main one. Fidelity made it easy and completely paperless, so kudos for that.

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