5 Ways to Organize Your Finances in the New Year

January 7, 2020

As a new year and decade dawn, it’s an opportune time for a fresh start on your finances. Getting a handle on money matters now will help you avoid headaches in the future and give you peace of mind in the present.

Here are five recommended steps to help you get off on the right financial foot this year and beyond.

1. Be cognizant of changing plan contribution limits. The 401(k) annual contribution limit for 2020 has risen to $19,500 from $19,000, and the catch-up contribution limit has increased to $6,500 from $6,000 for people aged 50 or older.1 Additionally, the individual contribution limit for a health savings account (HSA) has increased to $3,550 from $3,500, while the family contribution limit has risen to $7,100 from $7,000.2 For IRAs and Roth IRA plans, contribution limits didn’t change from 2019 to 2020 ($6,000 per individual; $7,000 if 50 or older), but there have been modifications to the income limits dictating a person’s eligibility to make contributions.3

2. Keep in mind SECURE Act changes. The Setting Every Community up for Retirement Enhancement (SECURE) Act passed in December 2019 and significantly impacts retirement planning for millions of Americans.4 One of the biggest changes from the SECURE Act is it raises the starting age for required minimum distributions from 70.5 to 72 among retirement plan participants.4 Withdrawals from these plans are taxable, so being able to delay them can be a good tax-planning tool. In order to take advantage of this new law, you would need to be 70.5 after Dec. 31, 2019. Another big change resulting from the SECURE Act passing is for people who inherit IRAs from a non-spouse. The SECURE Act now requires complete withdrawal of the funds within 10 years of inheriting the account.5 Currently, there is no law dictating when such assets must be withdrawn. There are some exclusions to this rule, so you should talk to your advisor if you are inheriting an IRA.

3. Be strategic about charitable donations. There’s an opportunity to implement charitable planning strategies in the wake of sweeping law changes caused by the Tax Cuts and Jobs Act (TCJA) at the start of 2018.6 For example, it may be beneficial to bundle two years of charitable contributions into one year and take the itemized deduction instead of the standard deduction.7 Additionally, if you earn a higher income in a given year, and would like to maximize your deductions to offset this income, you should consider bundling your charitable gifts for many years into one year by using a donor-advised fund. This would allow you to make a large charitable contribution in the higher-income year and take the deduction in that year, while spreading the gift over many years.8

4. Pull your credit report. We recommend pulling your credit report annually to look for unknown aliases or contact information. It’s important to see what’s on that report and ensure there are no unfamiliar addresses or unauthorized accounts that have been opened in your name. For instance, a P.O. Box you don’t recognize could signify that someone has fraudulently accessed your identity and received one of your credit card statements. The bottom line is you can’t be too careful about identity theft in the current digital age.

5. Share financial information with trusted individuals. Though we don’t like to think about it, unforeseen life events occur and it’s important that you and your family are financially equipped in case of an emergency. Whether it’s a spouse, child or friend, ensure a trusted individual is familiar with your financial situation and has access to all your financial accounts. You don’t necessarily have to communicate all information immediately as long as the person knows where to find it. For instance, you could say, “If something ever happens to me, here’s the alarm code for the house and this is where I keep my important documents and passwords.” In a worst-case scenario where you can’t talk or act on your own financial behalf, you’ll need someone who knows what to do. Additionally, if you have a child that is age 18 or older, you need to make sure you have estate documents, such as Durable and Medical Power of Attorneys9 and HIPAA documents10, prepared for them as they are no longer minors.

Taking these five steps now can go a long way toward ensuring your finances are in order this year and in the years to come. If you have any questions or need additional information, please contact your Exencial advisor.


1. Investopedia – 401(k) contribution limits for 2019
2. CNBC.com – These are the new HSA limits for 2020
3. NerdWallet – Roth IRA contribution limits, income limits 2019-2020
4. MarketWatch – The SECURE Act is changing retirement — here are the most important things to know
5. Forbes – Congress set to pass SECURE Act at last minute, impacting retirement planning and increasing taxes
6. The Balance – Trump’s tax plan and how it affects you
7. Tax Policy Center – Briefing book: How did the TCJA affect incentives for charitable giving?
8. National Philanthropic Trust – The tax advantages of donor-advised funds
9. Investopedia – Power of Attorney
10. Investopedia – Health Insurance Portability and Accountability Act (HIPAA)


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