5 Financial Matters to Resolve Before the Holidays

I think the best time to go over your retirement finances is in November. The holiday season is always very busy, and there are many financial matters that need to be taken care of before the New Year. Let's get these retirement finance needs out of the way so we can enjoy the holidays.

401(k). The current 401(k) contribution limit is $17,500. If you are 50 or older you can add up to another $5,500 as a catch-up contribution. Now is the time to check your 401(k) account to see how much you have contributed since the beginning of the year. If you haven't maxed out your 401(k), then this is your last chance to increase your contribution for 2014. You might also want to allocate some of next year's raise to increase your 401(k) contributions in 2015. The 401(k) contribution limit will increase to $18,000 in 2015, and the catch-up contribution limit will also increase to $6,000. Also, check with your retirement plan administrator to see if they offer an automatic increase option.

Roth IRA. The Roth IRA contribution limit is $5,500 for those under 50. If you are 50 or older the limit is $6,500. The easiest way to contribute to your Roth IRA is to deduct a set amount automatically from each paycheck, but you can also contribute manually throughout the year. Now is a good time to double check your contributions and see if you can add any money to a Roth IRA account for 2014. When you make Roth IRA contributions you will never have to pay tax on any gains after you meet the withdrawal qualifications. This tax-free status gives you more flexibility in how and when you pay taxes in retirement.

Capital loss write-off. This has been a great year for stocks. Many investors have capital gains they will need to pay tax on. November is a great time to see if you have any stocks that had losses. Sell those stocks and you can use the capital loss to offset your capital gains and reduce your tax bill. Even if you don't have any taxable gains, it is still a good idea to sell some poorly performing stocks to offset up to $3,000 of your earned income. Additional losses can carry over to next year.

Rebalance. Once you finish dealing with contributions and sell off some stock, then you can check your asset allocation. The stock market had a great run over the last few years. If you haven't checked your asset allocation lately, then it's probably out of balance. When the stock market is doing very well it often means it's a good time to rebalance. Most of us probably need to sell some stocks and buy some bonds to get our asset allocation back in line. This will pay off later when the stock market drops. You can trade in some of your bonds later to buy stocks when they are down.

529 savings plan. If you have a child, there's even more saving to do. The cost of college tuition is increasing rapidly, and parents may want to help out as much as they can. If you have any money left after taking care of your retirement contributions, then consider adding to a 529 college savings plan. This can offset your state income tax and save you a few dollars next year. The fund will also grow tax free for the purpose of funding higher education. I'd hate to see our kid saddled with a $100,000 student loan, so we try to help out by saving what we can in his 529 account.

Enjoy the holiday. Once you have wrapped up all these loose ends, it will be time to relax and enjoy the holidays with no guilt. Another good thing about trying to get these financial tasks done early is that you'll know if you need some help. It's not too late to find a financial planner if necessary. If you wait until Christmas, then it might be tough to make an appointment with a financial planner, and it will be too late to act on their advice and guidance for 2014. Good luck and enjoy the holidays.

Joe Udo is a stay at home dad who blogs at Retire by 40.