The top 8 things that should be on your 'end of the year financial to-do' list

When putting together this year’s holiday ‘to-do’ list, be sure to also include all of the financial details you need to look after by December 31st.

If you hold any kind of investments, have children or grandchildren, or turned 71 this year, this is one list you might want to bookmark (or print off if you’re more ‘old school’). While it may not be filled with elaborate gifts or delectable treats, taking care of the items on this list will provide you with the financial peace of mind to make you merry not only during the upcoming holiday season—but also in the years to come.

Here are your top 8 financial ‘to-dos’ before the end of the year:

#1: Consider making TFSA withdrawals by December 31^st.

If you were thinking about withdrawing from your Tax-Free Savings Account in the next few months to pay for home renovations, car repairs, or other big-ticket items—you might want to consider taking that money out by December 31st.

Why?

Well, if you withdraw funds from your TFSA after January 1st, you won’t be able to re-contribute that money until the following calendar year (assuming you’ve already maxed out your TFSA contribution room).

By withdrawing from your TFSA by December 31^st, you’d technically be able to put those funds back the next day (January 1^st), in addition to the extra contribution room available in the new year. This is very beneficial in the event you had to postpone or cancel your original plans for that money (because you’d then be in a position to immediately re-contribute the amount you withdrew from your TFSA without incurring any over-contribution penalties).

#2: Get those RESP contributions in by December 31^st to maximize the CESG.

While you can contribute to a Registered Education Savings Plan anytime (within 31 years of opening it), maximizing your contributions before the end of each calendar has one very specific benefit—getting the most from the Canada Education Savings Grant (CESG).

That’s where the government chips in 20% over and above your annual contributions.

That equals an extra $500 a year in CESG money per child (on yearly contributions of $2,500 per plan)—up to a lifetime maximum of $7,200 per child². However, the government will only match your contributions until the end of the calendar year that your child turns 17—which makes an early start to RESP contributions, all the more important.

RESP 101: a 3-step guide to maximizing its total savings potential

#3: Turned 71 this year? Your RRSP needs to be converted to a RRIF.

Your Registered Retirement Savings Plan (RRSP) matures the year in which you turn 71. By December 31^st of that year, it must be either converted into a Registered Retirement Income Fund (RRIF) or annuity, or paid out in cash. If you choose to have it paid out in cash, it will be added to your income and you will be taxed on the entire amount.

Want to make one last RRSP contribution the year you turn 71?

While you would typically have until the end of February/beginning of March of the next year (to contribute to your RRSP), in the year you turn 71 your final contribution must be made by December 31st.

#4: Turned 72 this year? You must make at least one RRIF withdrawal.

One of the main differences between a RRIF and an RRSP is that contributing to your RRSP was optional. Withdrawing annually from your RRIF is mandatory. If you have converted your RRSP to a RRIF, you have to make at least one withdrawal per year starting the year you turn 72. The annual amount you are obligated to withdraw is based on a percentage determined by the government and must be made by December 31^st of that year. As you get older, the amount of those mandatory withdrawals increases (keep in mind that all withdrawals from a RRIF count as taxable income).

#5: Tax-loss selling—speak with your financial advisor before December 31^st.

The market is a rollercoaster. When interest rates go up, the value of your investment portfolio could go down.

If certain non-registered investments in your portfolio have decreased in value this year, you may want to consider selling off underperforming assets prior to December 31^st. This will allow you to realize losses to offset capital gains in the current tax year. You can also carry back capital losses three preceding years or carry them forward indefinitely. Naturally, this depends on your investment timeline, tolerance for risk, and financial goals—which is why we recommend speaking with your financial advisor first before making any final decisions when it comes to selling investments within your portfolio. We also recommend consulting your tax advisor with regard to tax.

#6: Maximize any charitable donations.

‘Tis the season to give—so if you want to get a donation receipt (for this year) that you can claim on your tax return in the spring, be sure to give those charitable donations by December 31^st.

However, there are more than just cash donations to consider.

If your investment portfolio has performed exceptionally well this year and you would rather give to a worthy cause instead of paying taxes on capital gains, you may also want to consider giving the gift of appreciated shares or provincial funds to charity. Because not only would you get a receipt for the fair market value of those shares or funds, but you would also pay no capital gains tax on that appreciation (just be sure to consult with a tax planning specialist beforehand).

#7: Get all of your year-end expenditures in order.

And while we’re on the subject of taxes… from tuition and legal fees, to childcare, medical, and moving expenses—there are a series of expenditures you can claim on your tax return (as long as you meet eligibility requirements, of course). So, if your plan is to include these deductions when you file your taxes next year, be sure to get all of those expenses paid and receipts in order by December 31st of this year.

#8: Review your estate plan, investment beneficiaries, insurance policies, etc.

Getting married. Having kids. Getting divorced. Life can throw some big changes your way from one year to the next. That’s why it’s important to keep all of your important papers and policies up-to-date. From your estate plan and insurance policies, to the beneficiaries on your investments—reviewing these documents by the end of each year will ensure your financial affairs are always in order for the year ahead.

Need help with your financial to-do list? Contact Educators Financial Group for a year-end review.

From pay grids to pension plans (OTPP/OMERS), we understand how your pay structure works during your working years and in retirement. Which means we can provide you with the kind of financial advice that makes the most sense—both during and after your education career.