Productivity Tips for the New Year
Are you feeling bogged down in a swamp of clutter, deadlines, and incomplete tasks? As we draw closer to the end of the year, make it your goal to do a few simple things over the course of a day or two that will result in increased productivity and peace of mind for 2020.
Clean Up Your Technology
Just as you regularly clean your home, your technology should be decluttered occasionally to help it—and you—function more efficiently. It may seem tedious, but you can listen to your favorite tune or watch an old movie while you quickly refresh your technology.
- If your voice mailbox is full or nearing capacity, it only takes a few seconds to delete old messages.
- If your email inbox contains more than a few unread messages, skim them, reply when necessary, and delete or archive old messages. If your inbox is frequently inundated with promotional emails, unsubscribe from them to permanently reduce the clutter.
- Similarly, if your cell phone is crammed with apps you never use, remove them so that only the apps you actually need remain.
- Clean up the hard drive on your computer. Check your computer's storage settings and delete unnecessary files or move old files you want to keep to an external drive.
- If it has been a while since you updated your Facebook profile, it is a good idea to review your privacy settings, remove access to third-party websites and applications you do not use, review your friends and followers to make sure you still want them to see the content you are sharing, look at groups you have joined to see if there are any you are no longer interested in, and remove any tags you do not want to share.
- Last but not least, physically dust and wipe down your laptop, mouse, phone, and other devices with an electronics-friendly spray and These devices harbor an astounding number of germs—more than the typical toilet—which can make you sick if they are not cleaned on a regular basis.
Knock Out Your Financial To-Dos
There are several end-of-the-year financial deadlines, some of which may result in lost opportunities, forfeitures of funds, or even tax penalties if they are left undone. Make sure your hard-earned money is working for you.
- Take a look at your 401(k) plan to see if you can meet the annual contribution limit if you are not presently on track to do so. If you are able to contribute more, you can increase your election before the end of the year. In 2019, investors can contribute a maximum of $19,000—and those age 50 and older can make an additional $6,000 catch-up contribution, lowering their taxable income for the year the contributions are made. While you are at it, review your asset allocations, and check to see if your account needs to be rebalanced.
- Use up the funds in your medical or dependent care flexible spending accounts (FSAs) to prevent your contributions from being forfeited. These accounts allow you to make pre-tax contributions to pay for certain qualifying medical or childcare expenses, but they often must be depleted by December 31st, as rollovers are typically not permitted, although some medical FSAs allow $500 to be rolled over to next year and others have a grace period option allowing employees to incur expenses for two and a half months after the end of the plan year, e.g., until March 15th for a plan ending December 31st.
- Take the required minimum distributions (RMD) from your Individual Retirement Account (IRA), 401(k), or other retirement savings plan if you are 70 ½ or older. (Under the current law, RMDs must begin at age 70 ½ - but that could change if Congress passes the SECURE Act.) If you do not take your RMD by December 31st, the IRS can impose a stiff penalty—50% of the amount of the distribution you neglected to take, which could amount to thousands of your hard-earned dollars.
Wrap Up Personal Loose Ends
Often, things we consider urgent take precedence in our schedules, and equally important personal tasks can be pushed aside. Set aside a few minutes to take care of some personal matters before the end of the year.
- According to the REAL ID Act passed by Congress in 2005, by October 1, 2020, all individuals are required to have obtained a REAL ID compliant driver's license or ID from their state's driver's licensing agency if they wish to fly on a commercial aircraft or gain access to federal facilities. It is better not to wait until the last minute, as often, the DMV will not be able to provide the new card the same day but will have to mail it to you. If you do not have a REAL ID, you will be out of luck when you try to board that business or personal flight scheduled for October 2, 2020.
- Call an old friend you have been meaning to contact. Reconnecting with important people in our lives can be one of the most energizing things we can do for ourselves.
Meet Year-End Estate Planning Deadlines
Each year, there are several year-end tasks that will ensure your estate planning goals are accomplished, particularly those providing tax benefits.
- Under current federal tax law, you can give away $15,000 per person, per year, without paying any gift tax on that transfer or affecting the unified credit amount. If you would like to make tax-free gifts this year, make sure that you do it before December 31, 2019 to take advantage of the annual gift tax exclusion. Starting January 1, 2020, you can make additional tax-free gifts up to the exclusion amount if you choose.
- If you have created an irrevocable life insurance trust (ILIT), you should make a gift to the trust in the amount of the premium due for the insurance policy in plenty of time for the trustee to send out the “Crummey” notice to the trust's beneficiaries letting them know of their right to withdraw that amount before a specified deadline (at least 30 days' notice should be given) before paying the premium. Regardless when next year's premium is due, it is a great idea to do this as part of your year-end estate planning tasks. This will ensure that the insurance proceeds will not be included in your estate for tax and probate purposes.
- Consider new strategies for your charitable giving before the end of the year. Under the new tax law passed in 2017, the standard deduction was nearly doubled and is now $24,400 for married couples filing jointly. As a result, some have considered making contributions in one year that they previously would have made over the course of two years to enable them to benefit from itemizing deductions. For example, if a couple has $10,000 in local property taxes and $5,000 in mortgage interest expenses, and they normally would have made a $7,500 annual contribution to their favorite charity, they would not benefit from itemizing their deductions, as the total amount they could deduct is $22,500. If they double their contribution to $15,000 this year, that would bring their itemized deductions to $30,000, which is significantly higher than the standard deduction. Then, in 2020, they would not make a charitable contribution and could utilize the standard deduction.
Give Us a Call Today
Many of your year-end chores are easily accomplished on your own. However, when it comes to your estate plan, an experienced estate planning attorney can ensure that everything is done as the law requires to make sure your estate planning goals are met. Call the Pratt Law Group today at (972) 712-1515 to schedule a meeting so we can help you complete your year-end estate planning tasks.