Investing 101 What You Need to Contribute to Before the End of Year Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Mint.com Published Dec 4, 2018 - [Updated Apr 27, 2021] 5 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. The end of the year is rapidly approaching and it can be easy to get distracted by all the holiday festivities. But before the clock strikes midnight on December 31, there are some critical money moves you should make to minimize your tax liability and maximize your dollars! Here are six places to consider contributing to before the end of the year. Try to Max Out Retirement Accounts The big, obvious answer is to do what you can to max out contributions to retirement plans. Whether it’s at the traditional plan (giving you a tax benefit today) or a Roth option (in which you contribute with post-tax dollars today to give you a tax benefit in the future) – it’s a great strategy to try and get as close as you can to max out your allowable contribution. In 2018, you can contribute up to $18,500 to a 401(k) for those under 50 and those 50 and up can also contribute an additional $6,000 in catch up contributions. Maxing out is a lot of money though, so do your best to at least take advantage of any employer match up to the maximum capacity so you can get your free money! 401(k) contributions are generally due at the end of the calendar year, so you need to get any contributions completed by December 31. An IRA has the perk of allowing you to contribute until taxes are due, which means you can make 2018 IRA contributions until April 15, 2019. For 2018, you can contribute $5,500 to an IRA or $6,500 if you’re 50+. The tax treatment depends entirely on which type of IRA you’re contributing and whether or not you’re covered by a retirement plan at work. Be sure to check the rules before you make your contribution. Use It or Lose it with Your FSA Have you been contributing to a flexible spending account all year? Then make sure you use up those funds before you lose them. It’s important to know the terms of your employer’s specific FSA plan. You may be eligible to roll over $500 if your FSA has a carryover policy. A grace period policy allows you 2.5 extra months into the following year to finish using up your funds. But a standard-issued healthcare FSA means it’s use it or lose it by the end of the year. Keep in mind, you can use your FSA funds for more than just medical bills. You can use those funds towards products like contact lenses and solution, contraceptives, allergy and sinus medications, even breast pump and supplies. That means you could theoretically stock up on things you need or may need next year. Stuff More Money into an HSA HSA is only available if you have a high deductible health plan (HDHP). The advantage of an HSA is the ability to stuff away money for future medical experiences without the “use it or lose it” policy of an FSA. Your contributions are not only pre-tax, thus lowering your taxable income, but they also can also grow tax-free in the account itself. You won’t pay tax on the HSA money as long as it’s withdrawn to pay for a qualifying medical expense. This also enables people to save up for future medical expenses, such as a pregnancy, a necessary surgery or generally prepare for medical expenses in retirement. In 2018, a family with HDHP cover can contribute up to $6,900 to an HSA and an individual can contribute $3,450. Fund Your Child’s Education with a 529 Plan Planning for the future education of a child? A 529 Plan is another fund to which you can contribute this year. There is no federal tax deduction for contributing to a 529 Plan, but the money can grow tax-deferred and using the money from the fund is generally not subject to taxation if it’s used for a qualifying educational expense. There isn’t a maximum contribution limit per year, but keep in mind that a contribution of more than $14,000 could trigger a gift tax for the recipient. The other limit is a rather vague one by the IRS stating, “contributions cannot exceed the amount necessary to provide for the qualified education expenses of the beneficiary.” You also are not restricted to just using the 529 Plan in your state if you feel another state’s plan is more competitive. Check in on Your Investments If you’re investing beyond just your retirement accounts, then the end of the year is a good time to do an audit of your portfolio. Evaluate how it’s been performing and decide if you need to rebalance your portfolio. You may need to rebalance if the asset allocation of your investments no longer aligns with your time horizon and risk tolerance. For example, you know you don’t need access to your investments for 10 years (time horizon) and you have a fairly high-risk tolerance so you invested 80% stocks and 20% bonds (asset allocation). However, your stocks performed well and now the asset allocation is 90% stocks and 10% bonds, you need to rebalance and sell off some stock and buy some bonds to get back to your 80/20 split. You might also want to engage in a practice known as tax-loss harvesting, which, in overly simple terms is selling an investment at a loss and reinvest what you sold back into the market. You can write the loss off on your taxable income. This strategy is also a good end-of-year option to minimize your tax liability. Donate to Your Favorite Charitable Organization The holidays are often the giving season, which also can come with the added benefit to giving you an income-tax deduction. If you give to an organization with 501(c)(3) status, then it’s been granted tax-exempt status by the IRS and you can get a receipt of your contribution to write-off on your taxes. You do want to ensure that it’s a legitimate organization and actually spending the contributions in a manner that aligns with the mission of the charity. You can use sites like CharityNavigator, GuideStar, and GiveWell to vet a charity. This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation. Previous Post Should Freelancers Leverage an IRA? Next Post 5 Investing Mistakes and How to Avoid Them Written by Mint.com More from Mint.com Browse Related Articles Mint App News Intuit Credit Karma welcomes all Minters! Retirement 101 5 Things the SECURE 2.0 Act changes about retirement Home Buying 101 What Are Homeowners Association (HOA) Fees and What Do … Financial Planning What Are Tax Deductions and Credits? 20 Ways To Save on… Financial Planning What Is Income Tax and How Is It Calculated? Investing 101 The 15 Best Investments for 2023 Investing 101 How To Buy Stocks: A Beginner’s Guide Investing 101 What Is Real Estate Wholesaling? Life What Is A Brushing Scam? Financial Planning WTFinance: Annuities vs Life Insurance