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Retirement Planning

Retirement Planning: The Year-End Checklist

December, 2011 – Whether you’re caring for elderly parents or raising a child with special needs, we know that the holiday season can get a little bit…busy. But, sparing some time now to tie up loose financial and legal ends can be an extra gift of peace of mind in the upcoming year. Below is a list of a few last-minute deductions and steps caregivers and parents can take before December 31st:

Decide whether to use standard or itemized deductions. If the itemized deductions for qualifying expenses will be more than a standard deduction ($5,800 if you are single; $11,600 for those who are married and filing for a joint return), it could result in savings.

Charitable Giving: If you or your parent’s have old items or are planning on moving soon, it is the time to donate to goodwill for a tax benefit. Taking any unused clothing, toys and furniture to a Salvation Army or Goodwill store will allow you to take a charitable donation—just make sure to get a receipt.

If you make annual cash contributions, mail it before year-end, not after January 1st — you’ll be able to write off the donation on your 2011 taxes. Another option is that you can give up to $13,000 to any individual without having to pay the gift tax (the recipient must receive the gift/cash or deposit the check before December 31st).

Make your January 2012 mortgage payment early*. Mailing it early (before December 31st) will give you a deduction for your interest portion of the mortgage in 2011, compared to 2012. (* only if you are itemizing deductions)

Review Medical Expenses. Review your individual and family out-of-pocket medical expenses for the year. You can deduct out-of-pocket medical expenses if they exceed 7.5% of your adjusted gross income. If you are close to the 7.5%, see if there are any procedures or appointments that can still be completed before 2011 ends. By paying any outstanding hospital or doctor’s bills now, you can include them on your 2011 return as an expense with tax benefits.

Add money to your Roth IRA accounts. Contributions are limited to $5,000 (or $6,000 if you are 50 or older). Contributions can still be made until April 2012, but contributing after-tax dollars to a Roth IRA means you won’t have to pay tax on withdrawals in your retirement.

Max out your 401(k) account. The 401(k) contribution limit for 2011 is $16,000 (if you are ages 50+, it is possible to add an additional $5,500). This is the last month to add funds that count toward this tax year (it is also a great time to increase your contribution rates so it doesn’t have to be changed in 2012).

Review your taxable accounts. You should consider selling certain losing stocks if you made profits on the books in 2011 to offset your capital gain; for those who had no gain, make sure to take advantage of the $3,000 capital loss write-off.

Rebalance your taxable accounts. Check your asset allocation once you’ve completed dealing with contributions and stocks. If your asset allocation no longer resembles your target allocation, use the cash from selling your losing stocks to rebalance your asset allocation for 2011 (changing your 401(k) investment can also help rebalance your portfolio).

For those with children: Consider using any money left over from your retirement contributions to fund a 529 college saving plan. It’s worthwhile to contribute to the 529 if you pay state income tax.  Make sure to check your state’s 529 plan to see what the allowable state tax deduction is and if it will reduce your taxes.

For more tips about estate planning, elder law or special needs planning, visit or