From health care benefits to retirement contributions consumers often miss out on opportunities to save cash and maximize income in the New Year by overlooking some simple actions.
We learned important year end financial tips from Joan Jensen, president and CEO of Central Credit Union of Illinois. And remember, like the holidays the window of opportunity for acting will be gone in a flash!
Save on Medical Expenses-Schedule medical tests and procedures before year end if you:
- Have met your medical insurance deductible
- Itemize tax deductions and your 2013 medical expenses are high enough to be tax deductible
- If you have not used up you Flexible Spending Account for medical expenses. Recently, the U.S. Treasury Department announced it would be relaxing a rule requiring account holders to "use-or-lose" the funds in their accounts by the end of the year. Employers will now be able to allow participants to carry over up to $500 in unused funds into the next year.
The new rule says plans can offer either a grace period or the $500 rollover, but not both.
Save on 2013 Income Taxes
- Review your stock portfolio. Sell the dogs and claim them as losses on your taxes or use them to offset your capital gains.
- Watch out for capital gains in mutual funds. Many of these funds have used up their carry-forward losses from 2008 and 2009.
- If you itemize, bunch up you deductible expenses-Pay deductible expenses such as January's mortgage payment and charitable donations now rather than in 2014.
- If you or a qualified family member is a college student, check out the qualifications and rules to claim the American Opportunity Tax Credit and the Lifetime Earning Credit on your income tax.
Minimize Taxes and Penalties on IRA accounts
- Consider converting a traditional IRA to a Roth IRA-You may be better off in your retirement years if you convert all or part of a your traditional IRA to a Roth IRA.
- If you are at least 70 years old, take your required minimum distribution on your IRA before year-end. Failure to do so could result in a 50% penalty.
- If you have an inherited IRA, you may need to take a distribution regardless of your present age. So, act now to avoid penalties.
Max out your 401K, other retirement accounts, and 529 Plans.
Many employers have matching programs for 401K plans.
If possible try to a least max out the match from your employer.
It's free money!
If you turned 50 in 2013 or if you're turning the big five-O in 2014, consider the catch-up contribution limits for IRAs and qualified retirement plans.
IRAs offer an additional $1,000 contribution catch-up while 401(k)s, 457s, 403bs and other retirement plans allow for $5,500 in catch-up.