Your 2021 Year-End Checklist


In some ways it seems like we were just here, but as we close in on the final weeks of 2021, it’s time again to go through your financial and other documents to make sure you’re ready to close out the year on a high note and enter 2022, prepared for the opportunities that the new year brings. With the stock market having been on a generally upward trajectory for most of the year, it may be past time for you to review your portfolio to make sure your holdings are still within the guidelines you’ve established. It’s probably also time to look at your various accounts to make sure your beneficiary designations, forms of ownership, and other attributes to make sure everything still aligns with your long-term strategy.

Here are a few items to check as we head toward the end of 2021.

  1. Top off your retirement plans. You have until December 31 to make sure you’ve made your full, allowable contribution to your 401K, 403B, IRA, or other qualified retirement plan. For 401Ks and 403Bs, the annual maximum contribution for 2021 is $19,500, and for IRAs, it’s $6,000 (if you’re 50 or older, your 401K/403B maximum is $26,000, and your IRA maximum is $7,000). Saving more (especially with the tax-free accumulation afforded by these plans) is the number-one thing you can do to help yourself to a comfortable, stress-free retirement.
  2. Consider a Roth conversion. Speaking of retirement plans … Especially if you experienced a drop in income for 2021, think about converting a traditional 401K or IRA account to a Roth account. You’ll pay taxes on the untaxed portion of the account, but at a lower rate, since your income is lower. And you’ll enjoy the benefits of tax-free withdrawal in retirement, as well as no time limit on when the funds must be withdrawn (both unlike traditional accounts). Especially if you think you’ll be in a higher tax bracket at retirement than you are now, a Roth account can be a great way to save on taxes and increase the flexibility of your withdrawal plan. Talk to your financial or tax advisor about your tax situation as you think about a Roth conversion.
  3. Check your beneficiary designations. If your life circumstances have changed due to death, divorce, births, or other shifts in your family, it’s especially important to review your life insurance policies, annuities, retirement accounts, and pension plans to verify that your beneficiary designations are still accurate. Believe it or not, it is very common for there to be an old IRA account or dormant-but-still-in-force benefit plan from a previous employer with a beneficiary designation that is out of date. No matter how much you may wish it otherwise, whoever is designated as beneficiary at the time of your passing will receive the proceeds of the account on which they are named; now is the time to make sure your property will go to the persons you intend.
  4. Review your estate planning documents. Like beneficiary designations, estate planning documents must be periodically reviewed to make sure they remain current with your intentions. Especially if you’ve bought or sold a business, experienced a change in your family situation, retired, or gone through some other important life passage, you should go over your will and any trusts that you may have. This is also a good time to take a look at your powers of attorney, living will, or healthcare directives.
  5. Review and rebalance your portfolio. As mentioned above, 2021 has been a generally good year in the stock markets, so your portfolio has likely undergone some changes, simply by virtue of some assets increasing in value more than others. This is the time to sit down with your professional financial advisor to make sure that your investment plan is still within the guidelines you’ve established. It may also be time to consider whether you have any tax-loss harvesting opportunities you should take advantage of before the books are closed on 2021.
  6. Finalize your plans for RMDs. If you are taking distributions from any retirement plans, you’ll want to assess where you stand for required minimum distributions (RMDs) for the year. RMDs were waived for 2020, but that waiver was not extended to this year, so now is your last chance to be sure you’re within your guidelines for 2021.
  7. Review your plans for charitable giving. The 2020 CARES Act increased the 2021 deduction limit for cash gifts to qualified public charities to $600 for married couples filing jointly, but only for those who do not itemize deductions. If you are planning a large donation, this year it might be beneficial to itemize, as the deduction limit for such gifts to public charities is 100% of adjusted gross income (AGI) for 2021. Remember, this was a Consolidated Appropriations Act (CAA) one-year extension of a CARES Act provision that increased the normal 60% of AGI to 100% for 2020.

At Empyrion Wealth Management, we work with family stewards and others to help them make smart decisions concerning their financial planning, investment management, and other important needs. If you would value greater clarity in your financial or estate planning, please click here to schedule an appointment for a complimentary second opinion.


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