Blue Haven

Your beginning of year financial check list

By January 17, 2022 No Comments

With the year beginning anew, it’s a good time to double check that your financial related items are in order. To help, we’ve put together a financial check list.

Did any thing change at work/life?

The last few years has brought lots of change. But if you changed jobs, started a business, or had kids, you’ve got some work to do!

  • If you changed jobs recently make sure you roll over any old 401k accounts from your old employer
  • Did your 401K plan change? Many employers are offering enhanced matching policies to remain competitive in a tight labor market. Check for any notices from your company’s HR about changes to your plan.
    • It’s also a good time to double check that your 401K is allocated properly. We offer free 401K analysis to all of our clients. Book a 401K review here.
    • Double check elections. If you got a pay raise and were not previously maxing out your 401k you may able to afford it now. Maxing out 401k contributions reduces taxable income.
    • Check to see if your company is now offering a Roth 401K. If you are a high earner that is disqualified from contributing to a Roth IRA, you should consider taking advantage of a Roth 401K plan.
  • Do you have RSUs or stock options vesting? Many vesting schedules begin in the first quarter of the new year. Remember, RSUs are taxed when they vest whether you sell them or not.
  • If you got married, had kids, or got divorced, you need to update your W4 withholdings with your employer
    • or if your kids are no longer dependents, or you received an inheritance, you may need to update your W4 as well. Consult your company’s HR or your financial advisor with any questions!
    • if you or your spouse started a side business that doesn’t withhold taxes, you may want to add additional withholding to your employer’s W4

Plan for retirement and taxes

Double check your IRA contributions and start prepping for taxes now!

  • Contribute to your IRA. If you didn’t contribute in 2021 you can make a contribution towards 2021 until April 15, 2022. You can also make a 2022 contribution anytime between now and tax filing day, 2023. So in effect, you can make two contributions.
    • Make sure you check to see if you made any 2021 contribution last year so you don’t accidentally double dip.
    • IRA contributions are limited to $6,000 except for workers over age 50, who can contribute $7,000. If you didn’t make an IRA contribution for 2021 yet, that means you can contribute $12,000 total (or $14,000 if over 50). But we recommend doing such contributions through two different deposits to keep things in good order.
  • If you or your partner owned a business at the end of last year, you may qualify for special self-employment retirement accounts like a SEP IRA. These types of accounts have better tax advantages than traditional IRAs.
  • Plan to file your tax return by the end of February. Accountants and even the IRS themselves are warning of historic tax processing delays for those who wait until the last minute to file their taxes, or worse, file an extension. If you are owed a refund, you’ll want to file as soon as possible to avoid the mess!
    • More than ever, it may be worth it to ditch TurboTax and pay a little more for a full service accountant.

There’s a lot to do at the beginning of a new year, but we think these are among the most important!

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