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Fall Financial Fitness Tasks

September 2014

Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

Now that it is September, we have officially entered the last third of the year. Fall officially starts at the end of the month. Now is a good time to take stock of your personal finances during 2014 and make financial planning decisions for 2015. Every small step that you take can make a big difference in your future financial security. Below are six suggested fall financial fitness tasks to consider before year-end:

  • Get Ready for Open Enrollment Season - In another month or so, you’ll have an opportunity to make changes to health insurance available through your employer or a government-facilitated health insurance exchange under the Affordable Care Act. Review your use of health care services so far this year and compare options available during 2015. The University of Maryland Cooperative Extension has a site =''>helpful workbook to compare insurance policies.
  • Confirm Tax-Deferred Retirement Savings Contributions - If you participate in a tax-deferred employer retirement savings plan (401(k), 403(b), 457 plan or Thrift Savings Plan, depending where you work), your employer will soon be asking you to indicate the percentage of your pay that you want to save next year. Consider saving more money, if possible, especially if a raise in pay is expected. Saving just 1% more of income can make a big difference in the amount of savings that you will have in the future. Use this calculator to try out different scenarios.
  • Adjust Income Tax Withholding and/or Estimated Payments - Two estimated tax payments are still due for 2014 by September 15, 2014 and January 15, 2015. Make your best income projection and adjust your withholding and/or estimated payments accordingly. Also consider recent life events that affect taxes such as marriage, divorce, or the birth or adoption of a child. Do the same analysis for 2015. Ideally, you want to end up somewhere in the “sweet spot” between a small tax refund and a small tax bill. It isn’t prudent to over-withhold large sums of money due to the increasing incidence of tax refund identity theft. Victims are waiting many months to get back their own money. If you withhold less throughout the year, there will be little or no money held up if you are an identity theft fraud victim. Beware of under-withholding penalties, however, and learn the “safe harbor” rules to avoid a tax penalty.
  • Take Required Minimum Distribution (RMD) Withdrawals Before Year-End - This applies to people over age 70 ½ who have tax-deferred savings plans (e.g., 401(k)s and traditional IRAs) that they must take distributions from by December 31, 2014. For more information, see It is very important to do this correctly. Otherwise, the tax penalty is 50% of the amount that you should have withdrawn but didn’t. Don’t wait until the very end of the year when your RMD withdrawal could be delayed and not be executed in time.
  • Spend Your Flexible Spending Account (FSA) Balance - If you participate in an employer health care FSA, plan now to spend the money in your account by year-end. This means scheduling doctor’s appointments and elective medical procedures now so they can take place before the end of the year. Otherwise, appointments may be difficult to schedule on short notice. Also consider how much to save in your FSA next year based on this year’s health care needs and the cost of medical expenses. Ditto for savings in employer FSA plans for dependent care expenses.
  • Minimize Your Tax Liabilities - There are various ways to do this before year-end. Examples include increasing tax-deferred retirement savings plan contributions, incurring additional tax-deductible expenses to reduce the size of your tax bill (e.g., additional charitable contributions or business expenses, if self-employed), deferring some income into next year, and offsetting capital gains on investments with capital losses. Also avoid taking large capital gains relative to your income that could trigger the alternative minimum tax (AMT).

Many people are extremely busy these days with work and family responsibilities. It seems like we all have more to do and less time to do it in. Research and anecdotal evidence suggest that firm deadlines increase activity. Whether it is students completing a term paper or Congress passing a debt ceiling limit, deadlines can be a powerful tool for taking action. They give activities a higher priority level than they otherwise would have. Four months remain until the end of the year. Use this window of opportunity to review and improve your personal finances.