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Year-end Financial Checklist for Pastors

December 01, 2016


Colin Nass, CFP®, RICP®

For most churches, the fall season means an increase in ministry projects with activities throughout the church in full swing. The calendar is packed with observances, celebrations and community outreach events.

You might not be thinking about your financial plan, but now is the time to consider your goals for the coming year and reflect back on the past year. It’s the perfect opportunity to create a year-end financial “to-do” list.

Here’s a list of some of the things that you should do before the end of 2016.

Meet with your financial advisor.

Make it a priority and prepare for the meeting by creating a list of topics to discuss such as spending, saving and investment goals. Ask questions, review your year-end strategies, and set goals for the coming year.

Review and rebalance your portfolio.

Take a look at how your portfolio assets are currently allocated. Are your asset allocations in line with your investment strategy, goals and risk tolerance? Changes in the market might cause assets to shift, and you want to ensure that your assets are allocated so that they will maximize your investment strategy and benefit your overall portfolio. Rebalancing your portfolio lets you keep your risk level in check.

Review the housing allowance.

This important tax benefit must be designated prior to the year in which it will apply. Be sure that your church or trustee board officially designates a housing allowance for 2017 before the year ends. Ordained ministers who own or rent their home are entitled to receive the housing allowance. The federal tax code provides clergy with a tax exemption on the portion of their compensation that is designated as a housing allowance. However, it is considered taxable income for Social Security and Medicare. Visit the MMBB website — advantage — for details regarding the Housing Allowance.

Maximize your retirement contributions.

You should take a look at your retirement accounts now. If you have not maximized your contribution to your retirement account, consider doing so to lower your taxable income. For the 2016 tax year, the IRS allows employees to contribute up to $18,000 to their 401K and 403(b) retirement plans. Those over age 50 can make an additional catch-up contribution of $6,000. Keep in mind that any contributions you make within IRS allowable amounts are tax deferred until after you retire or begin taking withdrawals.

Review your yearly budget.

The end of the year is the perfect time to review your budget. Are you on track? Did you overspend? Did you have to dip into your emergency fund? Reviewing your annual spending will help you make your new budget for the coming year.

Plan charitable donations.

Charitable donations made to qualified organizations might help to lower your tax bill. You must make your charitable contributions by December 31, and they must be itemized if you are claiming these contributions as a tax deduction.

Spend what’s left in your FSA.

Many health insurance plans now include a Flexible Spending Account (FSA). If you have an FSA, it might be wise to check your insurance company’s policy as it might have changed in recent years. In the past, you had to spend everything before year-end. Otherwise, you would lose it. Now, employers can offer to rollover up to $500 or offer a grace period. Make sure that you understand your insurance company’s policy so that you don’t end up losing money you could have spent.

Evaluate your insurance policies.

Whether it’s auto, health or life insurance — review your policies annually to make sure that you are receiving the coverage and the service that you need. Year-end is also open enrollment period for employer insurance coverage. Pay close attention to changes in health insurance benefits. Many employers offer several plans that might have different costs and benefits, so it’s important to review all your options.

Update your beneficiary information.

Is your beneficiary information up to date and correct? Make sure that you update your beneficiary information following any major life events — such as a marriage, birth or death — and that you haven’t forgotten to name a beneficiary on any of your accounts.

Prepare for 2017.

Gather financial documents you’ll need, and make sure that everything is up to date, especially if you have had a change in 2016. Something as simple as making sure your address is updated can save you a lot of headaches later.

Colin Nass, CFP®, RICP® is the Senior Wealth Manager in the Financial Planning Division at MMBB Financial Services [ ]. He uses his 20+ years of financial planning and investment experience to assist members in achieving their financial goals.

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