2020 Year-End Checklist


2020 Year-End Checklist

It is officially the fourth quarter, and while many cannot wait until the “unprecedented times” of 2020 are over, there is still a bit of housekeeping you will likely want to do before ringing in the New Year. Check these items off your financial year-end checklist before year-end to help keep you financially on track for 2021:

Max out retirement account contributions.

Review your contributions to date for all your retirement accounts. If you have not made the maximum contributions to your employer-sponsored or self-funded accounts, consider increasing your contributions. You can adjust your employer-sponsored accounts at any time and the changes will likely reflect in your next payroll cycle.

Consider converting your traditional IRA to a Roth.

Roth conversions are particularly attractive in a favorable tax environment, such as 2020. With the Presidential Election around the corner and COVID-19’s impact on revenue, taxes may rise in 2021 to make up for the shortfall. This possible tax increase makes 2020 an excellent year to convert your traditional IRA to a Roth. IRAs that have decreased in value due to the market downturn provide you with a tax advantage down the road by converting the lower value to a Roth. You will pay a lower tax bill up-front due to your portfolio’s reduced value, but when you use the money for income in retirement, your withdrawals will be tax-free.

Donate to charity

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides additional tax relief for donors who contribute to a qualifying organization. If you take the standard deduction on your 2020 tax return when you file taxes in 2021, you can claim a new deduction of up to $300 for cash donations.

In most cases, if you itemize your taxes for 2020, the amount of charitable cash contributions taxpayers can deduct on Schedule A as an itemized deduction is limited to a percentage (usually 60 percent) of the taxpayer’s adjusted gross income (AGI). Qualified contributions are not subject to this limitation. Individuals may deduct qualified contributions of up to 100 percent of their adjusted gross income. A corporation may deduct qualified contributions of up to 25 percent of its taxable income. Contributions that exceed that amount can carry over to the next tax year. To qualify, the contribution must be:

  • A cash contribution.
  • Made to a qualifying organization.
  • Made during the calendar year 2020.

Use tax-loss harvesting to reduce your tax bill.

Suppose some of your investments have declined in value this year. In that case, while others may have experienced significant gains, you can offset capital gains by selling some of your depreciated investments at a loss. Implementing this strategy into your year-end checklist can reduce your taxable income by up to $3,000 for 2020.

Review your Medicare coverage and make changes during open enrollment

If you are currently on Medicare, it is good to review your plan elections and consider making changes to your coverage. For example, if your doctor has recently prescribed a drug, you regularly take, electing Part D for 2021 may be worthwhile. You have one opportunity to make changes to your Medicare coverage every year during open enrollment from Oct. 15 to Dec. 7 with your new elections effective Jan. 1, 2021.

Review your Social Security options with your financial professional

You may want to revisit your Social Security retirement benefits strategy if you’ve decided to retire, or are in your 60s and have been laid-off. Depending on your circumstances and financial goals, it may be wise to adjust your benefits timeline.

Check-in with your financial professional during these last months of 2020 and discuss any life changes that may impact your financial goals, including circumstances related to COVID-19. Together we can make a year-end checklist to help secure your financial future.

Disclosure: For financial professional use only.  Not for use with the general public. Before any decisions are made regarding your client’s financial situation, your client’s individual circumstances and objectives should be discussed.  There are many factors to consider. This newsletter is not endorsed or approved by any other Government Agency. It is designed to provide general information on the subjects covered and should not be considered as tax advice. The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. While tax and legal issues may be discussed in the general course of financial and investment planning Simplicity Wealth, LLC does not provide tax or legal advice. Please consult with your tax or legal professional prior to making decisions relative to these issues.


In addition, for those who are looking for financial advice, we realize there are many available options. And deciding who to work with is a challenging problem.  At Strategic Path Financial Group, we know that it is your retirement, and you should have control over it. We offer our experience and knowledge to help you design a custom strategy for financial independence. In conclusion, contact us today to schedule an introductory meeting!