Your Annual Financial Plan Review Checklist

Creating a checklist can help you focus on the most important aspects of your annual financial review. Consider the following questions when discussing your financial plan with your advisor:

Should I rebalance my asset allocation?

Start by examining the performance of your stocks, bonds, cash and other assets. If your investments are not performing up to your expectations, you may want to rebalance your portfolio¹. You can rebalance your investment portfolio by selling existing assets and using those proceeds to purchase different assets or allocating new investments to areas you want to increase. Keep in mind rebalancing may involve tax implications, especially for non-tax-deferred accounts. Consult with your tax and financial advisor before rebalancing your asset allocation.

Am I on track saving for my retirement?

Making sure you are on track saving the amount you will need during your retirement should be a priority for your annual financial plan review. If you participate in an employer-sponsored retirement plan, consider investing as much as you can afford. If you do not have access to an employer-sponsored plan, or if you do and can afford to contribute even more, consider funding an IRA.

What were my yearly capital gains and losses?

If your year-end planning entails selling certain assets, be aware of the rules regarding capital gains and losses. The federal government taxes gains on investments held less than one year as ordinary income and investments held for more than one year at a 15% rate when you file your income taxes. Capital losses can offset gains up to $3,000 annually, but you cannot apply those same losses across multiple years. State tax rules may differ, so always consult with a qualified tax professional.

Am I taking full advantage of tax-advantaged accounts?

Certain investments receive favorable tax treatment. You can contribute to your employer-sponsored 401(k) tax-free. This deduction also decreases your taxable income for tax purposes. Contributions can grow tax-free until you make qualified withdrawals during retirement. If you are 59 ½ years or older and have maintained the account for a minimum of five years, qualified withdrawals from a Roth IRA are also tax-free².

Reviewing your financial plan on a yearly basis is a vital part to wealth management and retirement planning. To review your financial plan find an advisor.