By Harness WealthFinances — November 20, 2019

5 Financial Planning Optimizations to Complete Before 2020

While the last two months of the year are often focused on holiday preparations and celebrations, there are five areas of your finances that you need to be reviewing in order to reduce your tax burden and maximize your financial gain before the end of the year.


These are the five areas of your financial picture that you need to consider optimizing before year end. Not sure where to start or have more complex needs? A Financial Advisor, CPA, and/or Trust & Estate Attorney can help you identify the right opportunities for you.

1. Tax-loss harvesting

Paying taxes on investment gains can be a financial burden, but tax loss harvesting can reduce your bill.

Tax loss harvesting involves selling losing investments to offset capital gains, thus limiting the taxes you owe. While it doesn’t always make sense to take a loss on investments, evaluate your portfolio and consider whether selling some poorly performing assets may make sense in your situation.

2. Maxing out your retirement contributions

Ensure you are utilizing tax-advantaged retirement accounts, which are effectively free funds from the government to help you save for retirement. In 2019, maximum annual contributions for 401(K) accounts and IRAs both increased. The maximum contribution for 401(k) accounts increased to $19,000 (up from $18,500 in 2018) and the limit for traditional and Roth IRA contributions increased to $6,000 (up $500 from the year-prior). Additionally, those over the age of 50 are eligible to make an additional $6,000 catch-up contribution to a 401(k) and an additional $1,000 catch-up contribution to a traditional or Roth IRA.

Note, you actually have until Tax Day 2020 to make these contributions but should act ASAP to avoid forever forgoing the chance to make a 2019 contribution.

If you’ve already maxed out a 401(k) and IRA, you may also wish to explore investing in a health savings account (HSA) provided you have a qualifying high-deductible health plan. Contributions can be deducted from taxable income and withdrawals can be made tax-free from these accounts as long as funds are used for qualifying healthcare expenses.

3. Gifting

While a gift tax is charged on those who make large gifts, you’re allowed to make gifts of up to $15,000 per recipient in 2019 without any federal gift tax being assessed. Gifting funds during your lifetime can reduce your taxable estate upon your death, so consider taking advantage of the opportunity to make a gift this year.

One especially beneficial way to gift funds is to invest in a 529 account. These accounts can be used to pay qualifying educational expenses, including K-12 expenses and costs associated with college. Many states provide tax benefits for 529 contributions, and earnings from a 529 aren’t subject to federal tax when used to pay for eligible schooling-related costs.

Related article: Tax Strategy: Gifting Assets

4. Charitable giving

When tax reform passed in 2017, a substantial increase to the standard deduction meant many more families will now claim this deduction rather than itemizing. Unfortunately, choosing not to itemize means giving up the opportunity to claim a deduction for charitable giving.

One option if you wish to remain eligible for a deduction for donations is to bundle contributions. This would mean that instead of making smaller contributions over several years, you could make one large donation in one year so the amount of the donation exceeds the standard deduction. As the end of the year approaches, consider whether this strategy may make sense and whether this is a year you’ll itemize.

5. Estate planning

As you gather with loved ones over the holidays, it is a good time to take stock of your estate and ensure your family will be provided for if something happens to you.

Evaluate your estate plan and assess whether you have sufficient life insurance; whether assets are protected from potential loss, such as costs of long-term care; and whether you’ve made appropriate plans to provide for the needs of your beneficiaries.

More information: Create a Will


The right Financial Advisor, CPA, and Trust & Estate attorney can work with you to identify all the right opportunities to maximize your finances. Now is the perfect time to get the best team in place to help you. We’ll set you up with complimentary conversations with each advisory firm in order to help you ultimately select the right one. Get started here.