As we move into December, it’s time to think about the financial moves you need to make before year-end. You can still put off some decisions until the tax filing deadline in April, but others have to be done before the new year begins.

Employer-Sponsored Retirement Plan Contributions

You can make 2022 Individual Retirement Account (IRA) contributions until April 15, 2023. But, if you have an employer-sponsored retirement plan like a 401(k), the deadline for annual contributions is December 31.

Keep in mind that you can contribute up to $20,500, or $27,000 if you’re over age 50, to a 401(k). If you are short of this contribution limit, you can boost what you contribute to 100% of your salary (if you can afford that) until you reach the annual contribution limit.

If you do have to make a last-minute payroll adjustment, you probably want to coordinate with your human resources department to ensure the contribution change will impact the account before year-end. But if you are short, you can contribute up to 100% of your paycheck until you hit the limit.

Tax Loss Harvesting

I usually advise investors to take advantage of year-end tax loss harvesting in November. In fact, I covered the topic in a November article: Time for Tax-Loss Harvesting.

But if you have some nice gains in your portfolio this year, it may pay to sell some of your losers to offset those gains. You have about another week to do so, and then you will lose the opportunity until the end of 2023.

Roth IRA conversions

Although you can contribute to a 2022 Roth IRA until April 18, 2023 (next year’s filing deadline), if you want to convert a traditional IRA into a Roth IRA, you need to do it before the year ends. There are a number of situations in which it may make sense to do such a conversion.

For a conventional IRA, the contributions can be tax protected in the year they are made. But then the withdrawals will be taxed as income. For a Roth IRA, the contributions aren’t tax protected, but the withdrawals are free of state and federal income taxes.

One case in which a conversion may make sense is if you expect to move to a state with a higher income tax rate after retirement. However, if you expect to move to a state with a lower income tax rate, or if you expect your tax rate to be substantially lower when you begin to make withdrawals, it will probably be better not to convert.

Use Your FSA Dollars

Many people have a Flexible Spending Account (FSA), where you save pre-tax dollars and use them for health care expenses. But it’s a “use it or lose it” account. Although there are some carryover exceptions, in general if you don’t spend the money in the FSA for health care expenses occurred during the year in which you contributed the money, you forfeit the money.

Fortunately, there are numerous healthcare expenditures that can be reimbursed from your FSA. So, stock up before January 1 on medications, bandages, eyeglasses, and any other last minute medical expenses until you exhaust your FSA.

Notably, if you instead have a Health Savings Account (HSA), this account rolls over year after year, and you can pull funds from your HSA at any time to pay for medical expenses.

Charitable Contributions

Finally, if you still plan to make charitable contributions, consider whether there may be any impact of making the contribution in this tax year, or pushing it to the next.

For example, concentrating donations in one tax year year can increase the value of deductions beyond the standard deduction threshold, which could be then be taken in “off” years.

Editor’s Note: Did you know that options are powerful and flexible tools? They can be used by stock investors to reduce risk and enhance returns. However, they’ve gotten a bad rap because they’ve been used improperly by “get rich quick” traders rather than long-term investors.

As with any tool, options can be abused. But the problem is not with the options tool itself, but in its application.

Which brings me to my colleague, the renowned options trader Jim Fink.

Jim Fink is chief investment strategist of Options for Income, Velocity Trader, and Jim Fink’s Inner Circle. Jim’s investment methods have enabled him to take his life’s savings of $50,000, turn the amount into $5 million, and retire early at age 37.

Jim has been sharing his trading secrets for over a decade, giving regular investors not just one, but two different opportunities to get paid every single week. In fact, while the market tanked several times over the last few years, he hasn’t closed out a single losing trade.

To learn more about Jim Fink’s money-making methods, click here.