10 Easily Fixable, But Often Overlooked, Financial Planning Items

We go through our daily activities and at times neglect to re-think the financial aspects which can earn us some extra cash or prevent future financial hardship.

The following list is not meant to cover the entire or all events, but it does outline some items to be aware of that you may want to discuss in more detail with your tax, insurance, estate or financial advisor.

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1. Check the FDIC Coverage on Your Accounts

An open vault containing an egg.

Cash can accumulate over the years, especially if we are still working and saving. Make sure the cash in your bank accounts is not above FDIC Coverage LimitsWhich is $250,000 per person and $500,000 per joint account.

FDIC insurance is how much of your money is protected in the event of a bank failure. If you have a large chunk of cash (even temporarily) from selling and buying a home, you may want to split it among several banks.

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2. Make Sure Your Beneficiaries Still Understand

The woman sitting at the desk was thinking.

Review and add beneficiaries on retirement accounts Transfer on Death (TOD) Provisions On individual and joint accounts depending on your wishes. You should especially review beneficiaries after any major life changes, such as death or divorce.

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3. Review Your 401(k) Allocation

A colored pie chart.

If you recently changed jobs and signed up for a new 401(k) or if you have an older 401(k) that you are not monitoring, check your asset allocation to be sure. Make sure your 401(k) is consistent with your overall plan. You can check on beneficiaries on old plans to make sure they are in line with your current wishes.

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4. Make Provisions for Minors

A mother brushes her daughter's facial hair.

Guardianships/trusts may need to be established for minor children (or children with special needs), especially for divorced or widowed parents. Minors inheriting property outright can cause problems (as a legal guardian has control of the funds). If your sole heirs are minors, you may want to discuss options with your attorney.

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5. Maximize Earnings on Your Cash

Bundles of money piled up.

As interest rates are rising, check what your bank is currently paying on cash as it makes sense to transfer to banks. This may sound like a hassle, but 0.5% on $100K is $500 a year, if you can get 1% somewhere else you can make yourself an extra $500 a year by switching to an online bank. You can visit www.Bankrate.com for a list of current rates at various banks.

You may want to evaluate the options for any adjustable-rate loan. As rates go up your loan rates will go up too – if you have the cash to pay off these loans, it might make sense now.

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6. Stay on Top of IRA Distributions and Inherited IRAs

Stack of wooden blocks with dollar signs.

Looking at annual required IRA distributions can result in a hefty 50% tax penalty. If you are transferring custodians or advisors, be sure to note whether you took your distributions for that tax year. Usually this will be listed in your statement, but the new mentor or advisor may not be aware of it. Any legacy IRA received after 2019 needs to be distributed in full within 10 years unless you are down one of the exceptions to that rulesuch as inherited as a surviving spouse.

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7. Keep Track of HSA Reimbursement/Receipts

A woman peeks over a pile of paperwork.

With health savings accounts, there are no limits on when health care expenses are incurred and when it must be reimbursed. So you can pay cash for an expense now and get reimbursed years later if you want the HSA to keep growing, with tax benefits.

Knowing which items are eligible expenses can save you from taxes in the long term. Because you don’t need to pay yourself back today, it’s important to keep your receipts. Some people use spreadsheets, but Lively (livelyme.com) allows you to take pictures of your receipts, which are saved in the app for future reimbursement. The app also adds receipts and you’re able to pay per expense (or total) whenever you choose.

Be sure to check out the list of eligible items because some expenses you don’t think are covered are actually reimbursable, such as long-term care premiums, feminine products, masks, sanitizing wipes and even sunscreen. .

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8. Check Credit Card Fees/Subscriptions/Fraudulent Activity

A woman reads some papers with an incredulous look on her face.

If a dishonest person has entered your account or used your card, setting up an alert on your phone for all credit card charges will notify you immediately. If you don’t have time to review the statements and charges, you can set this up through Apple Pay or other phone apps.

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9. Comb through your portfolio for tax losses in the years below

woman working on spreadsheet

When the market is down, you can convert mutual funds or ETFs to similar investments and realize a tax loss. For example, a Vanguard S&P 500 mutual fund with a $10K loss can be sold and you can immediately repurchase a Schwab Broad Markets exchange-traded fund, which has the same but a different structure as an ETF. Is. You can bank the tax loss to offset future gains but still invest in the market when it recovers. just take care wash sale rules, where you sell a stock at a loss and buy the same or “substantially similar” stock within 30 days. If so, you could end up due capital gains tax on the sale.

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10. Buy Term Life Insurance

Umbrella with rain.

If you have family members who will face financial crunch when you leave, it makes sense to consider buy life insurance, If you are the primary earner in your family, what if you passed away suddenly? Will your family be able to pay the mortgage? Does your spouse’s salary cover the total expenses of the family? If not, you may need to talk to your insurance advisor about getting coverage. And even if you’re a stay-at-home parent while you can’t earn a salary that needs to be replaced with insurance, if you die, your spouse probably needs help. Will be So you may also need life insurance.

Senior Financial Advisor, Evenski and Katz/Folds Financial Wealth Management

Roxanne is a Senior Financial Advisor with Alexandre Evenski & Katz/Folds, managing financial management of investments, insurance, annuities, college planning and client analysis on the development of investment policies. Prior to this, she was a senior vice president at Evensky & Katz, working with both individual and institutional clients. She has a Bachelor of Accounting and Business Management from the University of the West Indies, an MBA in Finance and Investment from the University of Miami.

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