Not much time left for year-end moves!

Lots of meals with friends and family. Hundreds of e-mails about shopping deals. And even a trip into the woods to saw down a nine-foot douglas fir for our living room. Yes, this past weekend clearly kicked off another major holiday season!

Of course, now that we’re coming into the home stretch of 2010, I’d also like to remind you that — amid all the general madness — you should also take a little time to revisit your finances.

Reason: Time is running out for certain moves that can benefit you and your family in 2011 and beyond.

Today, I’ll cover three of the most important year-end moves you can make …

Year-End Move #1:
Establish, Contribute to, or Withdraw from Retirement Accounts!

Yes, some accounts — such as IRAs — give you all the way until April 15, 2011 to sock away money for 2010 … but others must be established and/or funded by December 31.

For example, if you have access to an employer’s 401(k) plan, your contributions have to be in before New Year’s Day. So if you’ve been slacking, there should still be time for you to get something in there for this calendar year. Doing so will provide you with more money for the future … the possibility of matched contributions from your employer … PLUS a nice tax break on your 2010 taxes.

Self-employed? Consider a Solo 401(k), which allows you to sock away as much as $49,000 just THIS YEAR! But again, you have only until December 31 to establish one.

And if you’re 70 or older, remember that the temporary suspension of required minimum distributions on retirement accounts has NOT been extended into 2010!

That means you must take money out of IRAs, 401(k)s, and other plans by the end of this year. Failure to do so could cost you a massive 50 percent penalty. The only exception is if you turned 70 this year — in that case you have until April 1 to take your distribution.

Of course, there’s also …

Year-End Move #2:
Consider Converting to a Roth IRA

I’ve talked about some of the reasons to convert a traditional IRA to a Roth in past columns. But just to summarize, the two biggest reasons to do so are:

• Going forward, your money will be able to grow tax-free rather than just tax-deferred
• There are no required minimum distributions, which means the Roth is an ideal vehicle for retaining wealth and passing it along to heirs

If you’ve been considering a Roth IRA conversion, it’s time to get moving!

Both of these can prove to be huge advantages whether you’re 30 or 70!

And while the former income limits for conversions are now gone, only folks who convert by this December 31 will get the additional advantage of being able to split the taxes owed on the conversion across 2011 and 2012.

So if you’ve been on the fence about doing a conversion … I’d suggest you decide pretty darn soon!

Year-End Move #3:
Remember to Harvest Investment Losses

Have some dead weight in your portfolio? Then the next month is a great time to get rid of it!

After all, when you sell a position at a loss the IRS allows you to deduct that loss come tax day. That means you’ll be able to offset any gains booked this year on a dollar-for-dollar basis with no limit.

If you recorded more losses than gains — or no gains at all — you can use your losses to offset some ordinary income. The maximum amount is $3,000 ($1,500 if married filing separately) … but you can carry additional losses forward for future tax years.

Although it’s a bit more aggressive, you can even consider selling losers that you believe will come back to life down the line.

That’s because as long as you wait more than 30 calendar days before buying back those same positions, the loss will still count for tax purposes!

Obviously, there are some risks and commissions involved. But I think it’s still something worth considering, especially for more active investors.

And again, these are just three of the most common moves you can make. There are also other important year-end deadlines related to education accounts, charitable donations, and other categories.

So by all means, enjoy this month’s festivities as much as possible. But please spend a little time with your portfolio this holiday season, too!

Best wishes,

Nilus