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THE BUSINESS
OF MEDICINE
Consider
These Year-end
Financial Moves
By Elizabeth Olney
We’re nearing the end of 2020 –
and for many of us, it will be
a relief to turn the calendar page
on this challenging year.
However, we’ve still got a few
weeks left, which means you
have time to make some year-end
financial moves that may work
in your favor.
42 SAN ANTONIO MEDICINE • December 2020
Here are a few suggestions:
• Add to your IRA. For the 2020 tax year, you can put in up to $6,000 to your
traditional or Roth IRA, or up to $7,000 if you’re 50 or older. If you haven’t reached
this dollar limit, consider adding some money. You actually have until April 15, 2021,
to contribute to your IRA for 2020, but the sooner you put the money in, the quicker
it can go to work for you. Plus, if you have to pay taxes in April, you’ll be less likely
to contribute to your IRA then.
• Make an extra 401(k) payment. If it’s allowed by your employer, put in a little
extra to your 401(k) or similar retirement plan. And if your salary goes up next year,
increase your regular contributions.
• See your tax advisor. It’s possible that you could improve your tax situation by
making some investment-related moves. For example, if you sold some investments
whose value has increased, you could incur capital gains taxes. To offset these gains,
you could sell other investments that have lost value, assuming these investments are
no longer essential to your financial strategy. Your tax advisor can evaluate this type
of move, along with others, to determine those that may be appropriate for your sit-
uation.
• Review your investment mix. As you consider your portfolio, think about the
events of these past 12 months and how you responded to them. When COVID-
19 hit early in the year, and the financial markets plunged, did you find yourself wor-
rying constantly about the losses you were taking, even though they were just on
“paper” at that point? Did you even sell investments to “cut your losses” without
waiting for a market recovery? If so, you might want to consult with a financial pro-
fessional to determine if your investment mix is still appropriate for your goals and
risk tolerance, or if you need to make some changes.
• Evaluate your need for retirement plan withdrawals. If you are 72 or older, you
must start taking withdrawals – technically called required minimum distributions,
or RMDs – from your traditional IRA and your 401(k) or similar retirement plan.
Typically, you must take these RMDs by December 31 every year. However, the
Coronavirus Aid, Relief, and Economic Stimulus (CARES) Act suspended, or
waived, all RMDs due in 2020. If you’re in this age group, but you don’t need the
money, you can let your retirement accounts continue growing on a tax-deferred
basis.
• Think about the future. Are you saving enough for your children’s college educa-
tion? Are you still on track toward the retirement lifestyle you’ve envisioned? Or
have your retirement plans changed as a result of the pandemic? All of these issues
can affect your investment strategies, so you’ll want to think carefully about what
decisions you may need to make.
Looking back – and ahead – can help you make the moves to end 2020 on a pos-
itive note and start 2021 on the right foot.
Elizabeth Olney, is an Edward Jones Financial Advisor and is a member
of the BCMS Circle of Friends. Edward Jones, Member SIPC