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Financial management

10 year-end checklist items to help maximize your savings

Here’s a year-end checklist to help you stay on track with your financial goals and minimize your tax bill too.
10 minute read
November 24, 2021
Financial management
Tax tips

As you close out 2021 and prepare for the year ahead, we’re here to help you maximize your savings goals and minimize your taxes. To make year-end planning a little easier, here are some topics and related activities to consider and check off your list:

  • Retirement planning.
  • Gifting and charitable giving.
  • Health care planning.
  • Insurance planning and account consolidation.

Retirement planning

Max out your retirement contributions for 2021

There’s still time to make 2021 contributions to your retirement accounts. Year-end can also be a good time to reevaluate your spending by looking for opportunities to cut back and save more. Check out this year’s maximum contribution limits:

Account type Deadline for 2021 contributions Individual contribution limits*
Traditional and Roth IRAs April 15, 2022
  • $6,000 if under age 50.
  • $7,000 if age 50 or older. 
Employer plans (e.g., 401(k)/403(b) accounts) December 31, 2021
  • $19,500 if under age 50.
  • $26,000 if age 50 or older.


*Don’t forget, your IRA contributions can’t exceed your earned income for the year. With a Roth IRA, contributions are reduced or “phased out” as your modified adjusted gross income (MAGI) approaches the upper limits of the phase-out ranges.

See if you qualify for any 2021 retirement tax deductions

Depending on the types of retirement accounts you contribute to, you may be eligible for some last-minute tax deductions. Employer-plan contributions generally come out of your pay on a pre-tax basis, which automatically reduces your taxable income. But IRA contributions work a little differently. While Roth IRA contributions are never tax-deductible, you may be able to deduct your traditional IRA contributions. These deductions vary based on your MAGI and whether you’re covered by a retirement plan at work. See if an IRA tax deduction could be a perk for you

Take your RMD by December 31 to avoid tax penalties

Remember, there’s no mandatory withdrawal requirement for Roth IRAs. But with a traditional IRA, you’ll need to take your first required minimum distribution (RMD) by April 1 of the year following the year you reach age 72 (age 70½ if you reached 70½ before 2020). For all future RMDs, you have until December 31 of the current year.

It’s important to take your RMD on time, or you’ll be subject to a 50% penalty on any amount not taken. That penalty is on top of the ordinary income taxes you’ll pay on all your tax-deductible contributions and earnings. See how much of your RMD you’ve satisfied to date

If you don’t need to live off your RMD income, you can always reinvest it in a taxable account or gift up to $100,000 through a qualified charitable distribution (QCD).

Gifting and charitable giving

Take advantage of 2021 charitable giving tax deductions

If you want to make a qualified charitable distribution: Once you’re age 70½, you can use money from your traditional IRA to gift up to $100,000 annually to a qualified charity without paying taxes. This strategy provides the unique opportunity to support your favorite charities while keeping your taxes lower—the QCD is simply excluded from your taxable income.

If you don’t itemize your tax deductions: You can deduct your 2021 charitable contributions (up to $300 for single filers; up to $600 for joint filers) and they’ll qualify for an above-the-line deduction, which means your adjusted gross income (AGI) will be reduced by your donation amount without having to itemize your return. Note: There’s no plan to continue this provision in 2022.

Also, qualifying donations must be made in cash or cash equivalents (as opposed to stock, for example) and can be directed to most charitable organizations (they can’t be directed to private foundations, supporting organizations, or donor-advised funds).

If you do itemize your deductions: You’ll have the ability to deduct much larger donations when you itemize your return. In 2021, you can still deduct cash contributions of up to 100% (60% in 2019) of your AGI that you make to qualified public charities. For gifts to private foundations, supporting organizations, or donor-advised funds, you can deduct up to 60% of your 2021 AGI. Note: If you make a QCD, you won't be able to claim a charitable deduction with those same assets.

Give the gift of education

You have until December 31 to contribute to most states’ 529 education plans for any given year. However, plans administered in Georgia, Iowa, Mississippi, Oklahoma, South Carolina, and Wisconsin allow you to contribute until April 15 of the following year.

Maximum plan contribution limits vary by state but are usually between $300,000 and $500,000 per beneficiary. Since contributions to 529 education plans are considered gifts, you can contribute up to $15,000 per year for single filers ($30,000 if married filing jointly) per beneficiary without triggering federal gift tax.

Health care planning

Contribute to an HSA for 2021

If you’re enrolled in a health savings account (HSA) as part of a high-deductible health plan (HDHP), there’s still time to maximize your 2021 HSA contributions ($3,600 for individual coverage; $7,200 for family coverage).

If you’re relatively healthy and expect low annual health care costs next year, consider choosing an HDHP with an HSA during your company’s open enrollment period (typically in the fall). This will allow you to take advantage of the triple tax benefits and flexibility offered by an HSA. Since HDHPs typically have lower insurance premiums, think about directing those savings into your HSA for your future health care expenses.  

Don’t let your FSA balance go to waste

As part of legislation that was signed into law late last year, employers may allow employees to carry over any unused flexible spending account (FSA) balances from 2020 to 2021 and from 2021 to 2022, with certain relief details up to the employer. Refer to your benefits summary plan description for details.  

Review your Medicare benefits

If you’re no longer working or covered by an active employer plan, it’s important to enroll in Medicare before your 65th birthday, or you could be subject to lifelong premium penalties.

Medicare’s annual open enrollment period (October 15–December 7) offers a chance to make changes to your current plan. Take advantage of this time to review your elections—including your prescription drug coverage—and ensure they’re still appropriate for your current needs.

As a Vanguard Personal Advisor client, you have access to our Medicare Match tool. It’s simple to use, and it leverages a highly sophisticated formula to find the types of coverage that align with your preferences.

Insurance planning and account consolidation

Review insurance coverages

When life gets busy, it can be easy to fall into the “set it and forget it” mentality. But over the years, your assets may have expanded to include multiple homes or cars—or maybe you just have an overall larger nest egg. That’s why we recommend annually reviewing your insurance coverages with your brokers to ensure your family and assets are properly protected and that your policies are in line with current market values. Taking simple steps, like bundling your home and auto insurance to take advantage of discounted rates, can make a difference in your bottom line.

Consolidate accounts to simplify account management

If you have an old 401(k) from a former employer, you may benefit from rolling it over to an IRA to get more control over your investment options. Having your account assets in one place also gives you a better picture of your financial outlook and makes estate planning easier for your loved ones when it’s time to transfer your wealth. 

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