Fully Fund Last Year’s Tax Advantaged Retirement and Savings Accounts:
Before you begin making 2010 contributions to your IRA, Coverdell, ESA, or other tax advantaged investment accounts, consider making the contribution as a 2009 contribution instead. You can make “2009” contributions to eligible investment accounts ( dependent on maximum contribution limits) up to the time you file your 2009 Tax Return. What a perfect thing to do with your year end performance bonus (yeah, right!).
Adjust Your 401k or 403(b) Contributions:
If you were fortunate enough to “max-out” your 401k or 403(b) contributions in 2009, it’s a good idea to recalculate how much you contribute per pay period to ensure your contributions are spread out through the entire calendar year. If you expect to earn more money in 2010 (or your plan automatically adjust your contribution rate), there is a possibility that you may reach the IRS’s maximum contribution limit before your last pay period. If this happens, your company may not match you for that pay period because you didn’t contribute anything (you already reached your limit).
Adjust Your IRS and State Tax Withholdings:
Do you expect to get a FAT refund this year? Maybe you will end up needing to pay more taxes then you’ve already had withheld. In either case, its worth purchasing a good tax return software program and getting an estimate about how much money you should have withheld form each paycheck. If you hire a tax professional to prepare your return, don’t hesitate to ask their advice on tax withholding. Personally, I like to plan for a return of about $1000 to provide a little cushion incase I underestimated my tax burden for the year. For me, there’s nothing worse than giving an interest free “loan” to the government.
Reallocate Your Investment Portfolio:
This might sound complicated but I’ll try to break it down simply. Basically, if you have a large percentage of your money investment in one particular stock, bond, or mutual funds you’re exposing yourself to unnecessary risk. It’s a good idea to spread that money around into other investments. You know, DIVERSIFY! You don’t want to have all of your retirement “eggs” in one basket. Think of what happened to our poor friends at Enron!
Review Your Three Major Credit Bureau Reports:
If you haven’t reviewed your credit reports in a while you need to! Identity theft is reaching an all time high. Fortunately, recent legislation enacted a year or so ago provides free credit reports from the three major credit bureaus (Transunion, Equifax, and Experian). Simply log onto Annual Credit Report for your official government sponsored copy of your credit report. Click here for my step by step guide to obtaining your free credit report. If you find something fishy on your report, check out my guide to cleaning up your credit file (and improving your credit scores).
Protect Yourself (and Your Family) From Identity Theft:
As I mentioned above, Identity Theft is running rampant. To help assist you in keeping you and your family’s identities safe I have create the Ultimate Guide to Protecting Your Identity. Don’t waste your money on LifeLock or other ID theft protection programs. You can do a better job protecting your credit and identity yourself for free!
