16 End-of-Year Financial Checklist For Optometrists in 2024

KEY POINTS:
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(1) Max Out Employer-Sponsored Retirement Plans (401K or SIMPLE IRA)
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(2) Complete Backdoor Roth IRA ($7,000)
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(3) Solo 401(k) Mega Roth or Employer 401(k) Profit-Sharing Strategy
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(4) Roth Conversions During Lower-income Earning Years
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(5) Maximize Education(529 Plan), HSA, Gift Accounts
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(6) Use ALL Flexible Spending Accounts (FSAs)
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(7) Secure Insurance Coverage (Term Life & Disability) & Adjust For Salary Increase
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(8) Tax-Loss Harvesting
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(9) Tax Planning & Maximizing Deductions
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(10) Prepare for Estimated Tax Payments
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(11) Look at Your Charitable Contributions
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(12) Review Your Cash Flow & Budget
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(13) Front-Load Your Account for 2025
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(14) Establish or Revise Your Estate Plan
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(15) Review Your Investment Portfolio
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(16) Check If Your Financial Goals Are On Track
(1) Max Out Employer-Sponsored Retirement Plans (401K or SIMPLE IRA)
If you have access to a 401(k) or SIMPLE IRA, aim to contribute the maximum for 2024.
- 401(k)/Solo 401(k): $23,000 limit in 2024, rising to $23,500 in 2025; catch-up contributions are $7,500 for those over 50.
- SIMPLE IRA: $16,000 limit in 2024, increasing to $16,500 in 2025; catch-up contributions are $3,500 for those over 50.
- SEP IRA: Up to 25% of net income with a $68,000 limit in 2024, increasing to $70,000 in 2025.
Due to the SECURE Act 2.0, both employer and employee contributions can extend into the following year, but making contributions earlier is still advisable.
Additional Notes for 2024:
- If your practice has under 26 employees (or meets certain qualifications), SIMPLE IRA contribution limits increase by 10%, including catch-up amounts.
- Starting in 2025, employees ages 60-63 have a higher catch-up limit: at least $5,250 for SIMPLE IRAs and $11,200 for 401(k)s.
Resources:
Financial Pearl
If you as an owner currently sponsor a SIMPLE IRA at your practice, consider upgrading to a 401(k) in 2025 through providers like Human Interest or Ubiquity. This shift can yield:
- Higher tax deductions and contribution limits (e.g., $23,500 for a 401(k) vs. $16,500 for a SIMPLE IRA)
- The opportunity to perform Backdoor Roth IRA contributions ($7,000) without the presence of a SIMPLE IRA
- Affordable, flat-fee plans from $97/month with low-cost index fund options
- Up to $16,500 in tax credits over three years for establishing a 401(k) (up to $5,000/year plus $500/year for auto-enrollment)
- Profit-sharing capabilities up to $69,000, allowing a comparability setup that maximizes owner contributions
If You’re an Associate in a SIMPLE IRA: Your options are limited until you have additional 1099 income, which would allow you to open a Solo 401(k) for that portion of your earnings. Unless you can convince your boss to switch to a 401K, you are extremely limited in your retirement options.
(2) Complete Backdoor Roth IRA ($7,000) for 2024 & 2025
If you're considering tax-advantaged retirement strategies, completing both the contribution and conversion steps of a Backdoor Roth IRA by year-end is often beneficial—even though you technically have until April 15, 2025. Prioritize wrapping it up before December 31 if possible, to start 2025 with a clean slate.
- Contribution Limits: $7,000 in 2024, remaining at $7,000 in 2025, plus a $1,000 catch-up for those over 50.
- Pro Rata Rule: Be cautious if you have existing pre-tax IRAs (including SIMPLE IRAs), as the pro rata rule affects how your conversion is taxed.
- AGI Considerations: If your income is near the Roth IRA phase-out range ($146,000–$161,000), opting for the backdoor method from the start can ensure full funding without worrying about the direct contribution limits.
- Spousal IRAs: If you’re married and your spouse doesn’t work, consider contributing $7,000 to a spousal Roth IRA. This strategy doubles your household’s Roth savings potential.
Resources:
Financial Pearl
Kick off the new year with a head start. I personally make it a goal to fully fund my Roth IRA via the backdoor method in early January. That way, the full $7,000 has the entire year to grow and compound, maximizing long-term benefits.
(3) Solo 401(k) Mega Roth or Employer 401(k) Profit-Sharing Strategy
If you’re a solo practice owner considering after-tax contributions to a Solo 401(k)—whether paired with defined benefits or conversions to a Roth 401(k)—it’s essential to complete this process before year-end. This strategy is particularly attractive for high-earning optometrists, allowing for Roth contributions of up to $69,000 in 2024 and $70,000 in 2025.
High-income practice owners may also benefit from adding a profit-sharing component to their 401(k) plan, which can be set up with providers like Human Interest. A comparability set-up can enable deductible contributions exceeding $70,000, maximizing both your tax advantages and retirement savings.
Because the rules are complex and not all plans qualify, be sure to consult with your 401(k) plan administrator and CPA to ensure you’re implementing the best strategy for your individual situation.
Resources:
(4) Roth Conversions During Lower-Income Earning Years
Consider converting pre-tax retirement savings, such as Traditional 401K, Traditional IRA, or SIMPLE IRA, to a Roth IRA, especially if it aligns with your long-term tax planning strategy. While this will trigger a tax event, this move can be particularly beneficial for optometrists who find themselves in a lower income bracket for the year.
This situation often applies to those in residency or optometrists who are cold-start practice owners, as they typically experience lower salaries in the initial years.
(5) Maximize Education(529 Plan), HSA, Gift Accounts
When managing your financial portfolio, remember that most investment vehicles, apart from retirement accounts and Health Savings Accounts (HSAs), require contributions within the calendar year. Therefore, if you plan to increase your contributions this year, it's wise to act quickly. This is especially important for education savings plans like 529s and Coverdell Education Savings Accounts (ESAs), as well as ABLE accounts for children with disabilities, and Uniform Transfers to Minors (UTMA) accounts.
These accounts are instrumental in building a financial foundation for your children, particularly useful when they reach their 20s. While HSAs allow contributions until Tax Day, it's usually more advantageous to contribute earlier.
Resources:
Financial Pearl
For 529 Plans, note that contribution limits vary significantly by state, ranging from $235,000 up to $575,000 (notably higher limits in AZ, WI, UT, NH, AK, CT, MO, NC, VT, VI, WV). Check your state’s guidelines and plan ahead to make the most of these long-term savings options.
I personally have my children’s 529 plans within my Vanguard brokerage which has Nevada as its designated state administrator.
(6) Use ALL Flexible Spending Accounts (FSAs)
Remember, unlike HSAs, Flexible Spending Accounts (FSAs) generally don’t carry over. This means you should use any remaining FSA funds before year-end or risk forfeiting them. This is especially important for optometrists who rely on FSAs for healthcare expenses.
- Single/family FSA limit for 2025 is $3,300 (up from $3,200 in 2024)
Make sure to schedule any pending medical appointments, update prescriptions, or restock eligible healthcare supplies to make the most of these funds.
(7) Secure Insurance Coverage (Term Life & Disability) and Adjust for Salary Increases
Assessing and maintaining proper disability and term life insurance is crucial—especially for optometrists with dependents. Long-term disability policies generally cover about 60% of your income.
For life insurance, a general guideline for doctors is about $2 million in coverage, estimated by multiplying your gross salary by 17:
(Gross Salary x 17 ≈ Term Life Needed)
If you’ve experienced a significant salary increase in 2024, consider contacting your insurance agent to adjust your disability coverage accordingly. Ensuring the right level of protection helps safeguard your financial stability and the well-being of those who rely on you.
Resources:
- The Optometrist's Guide to Disability Insurance
- The Optometrist's Guide to Life Insurance
- Recommended Insurance Agents
(8) Tax-Loss Harvesting
Evaluate your taxable investment accounts for tax-loss harvesting opportunities before year-end. By strategically selling investments at a loss, you can offset capital gains and potentially lower your tax bill. In a declining market, this allows you to “share” your losses with Uncle Sam.
- Annual Deduction Limit: You can deduct up to $3,000 of net losses each year ($1,500 if married filing separately).
- Carry-Forward Feature: If your net losses exceed $3,000, you can carry them forward to future tax years, further reducing future tax liabilities.
Key Rules to Know:
- Substantially Identical Rule: Don’t buy back the same (or a substantially identical) investment within 30 days before or after selling it at a loss.
- Wash Sale Rule: Violating the above rule negates your ability to claim the loss.
- 60-Day Dividend Rule: Be aware that certain dividend timing can affect the eligibility of your loss.
Because tax-loss harvesting can be complicated, it’s wise to consult a CPA and follow all guidelines closely.
Resource:
(9) Tax Planning & Maximizing Deductions
Consider strategies like accelerating expenses and deferring income if they align with your current tax bracket. This is especially relevant for optometrists who manage their own practices or have additional business ventures (e.g., real estate). Potential options include:
- Qualified Business Income (QBI) Deduction
- SALT Deduction Limitation Workaround
- Bonus Depreciation
- Cost Segregation Benefits
- ADA Tax Credit
Resource:
Financial Pearl
You can receive up to $5,000 back on your tax return by making your optometric practice ADA-friendly. For example, purchasing accessibility-enhancing equipment—such as an iCare Tonometer, Rabin Color Test, or a Virtual Field device—can qualify. The credit covers 50% of eligible expenses over $250, up to a maximum of $5,000.
Because of the complexity and varying applicability of these options, it’s important to work with a CPA who can guide you toward the tax strategies that best fit your individual circumstances.
(10) Prepare for Estimated Tax Payments
If you're working full-time as an independent contractor (1099), it's important to ensure that you have set aside sufficient funds for the fourth-quarter estimated tax payment due on January 15, 2025. However, it's always best to stay on top of these deadlines to avoid any penalties and ensure financial compliance.
Financial Pearl
If you only receive occasional 1099 income, be mindful that the IRS may levy penalties for missing a quarterly payment deadline. The penalty is 0.5% of the unpaid tax per month (or part of a month). For optometrists earning less than $25,000 annually from 1099 work, this penalty might be under $100—relatively minimal. Still, it’s prudent to meet deadlines to avoid any extra costs and maintain solid financial compliance.
(11) Look at Your Charitable Contributions
Charitable donations not only provide personal fulfillment but can also offer valuable tax benefits. As an optometrist, take time to review your giving history for the year to ensure you’re maximizing potential deductions and making the most of your philanthropic impact.
Charitable Giving Tips:
- Bunch Your Donations: If your annual giving amount is fairly stable, consider consolidating multiple years’ worth of donations into a single calendar year. This “bunching” strategy might push you above the standard deduction threshold and allow you to itemize, potentially increasing your tax benefits. Donor-advised funds are excellent tools for bunching, as they let you contribute a lump sum in one year and distribute grants to charities over several years.
- Donate Appreciated Assets: If you have long-term appreciated investments, consider donating these assets directly to charity instead of selling them first. This approach can help you avoid capital gains taxes on the appreciation, and if you itemize, you can deduct the full fair market value of the donated assets.
By strategically planning and documenting your charitable contributions, you can ensure your generosity aligns with both your personal values and your financial goals.
Financial Pearl
A simpler alternative to a private foundation is a donor-advised fund such Vanguard Charitable but almost all of your brokerage will have one. Here, you make an irrevocable contribution to a 501(c)(3) organization. The funds are held and invested, and you can recommend which charities should receive support. A tax deduction is available in the year you make the contribution, based on public charity rules (see the accompanying chart for details). These assets can then be distributed to charities over several years.
Financial Pearl
When claiming a deduction for a charitable donation without a receipt, you're limited to cash donations under $250. You must provide a bank record or payroll deduction record for tax deduction claims. Receipts and additional proof are necessary for: (1) Cash donations of $250 or more (2) All non-cash donations 93) The IRS evaluates each donation individually, regardless of whether total donations to one organization exceed $250.
(12) Review Your Cash Flow & Budget
Gaining clarity on your cash flow is essential for managing your finances as an optometrist. By carefully monitoring income and expenses, you can plan for both everyday costs and significant upcoming expenditures:
- Identify All Income Sources:
Document all revenue streams, including income from your practice, part-time work, fill-in positions, and any investment dividends or interest.
- Track and Organize Expenses:
Keep detailed records of personal and practice-related expenses on a monthly and annual basis. This practice helps you identify spending patterns, manage budgets, and find opportunities for cost reduction.
- Optimize Savings:
Look for ways to trim unnecessary expenditures—whether it’s cutting back on streaming services or negotiating better terms on your mobile plan. Every dollar saved can be redirected toward more productive investments or financial goals.
- Assess Income and Expense Trends:
Remain aware of changes in your financial landscape. For example, consider any upcoming expansions of your practice, potential staffing changes, or personal life events like saving for your child’s education or caring for an aging relative.
- Plan for Major Upcoming Expenses:
Anticipate large expenditures in both your professional and personal spheres, such as new diagnostic equipment for your practice or a home renovation. Having a plan in place keeps you from scrambling for funds when the bills come due.
- Maintain an Emergency Fund:
Set aside a financial cushion equal to at least three to six months’ worth of living and operating expenses. This safeguard is especially important in healthcare, where unexpected events—like economic downturns or temporary closures—can disrupt cash flow. Staying prepared helps you navigate uncertainties and maintain financial stability in challenging times.
(13) Front-Load Your Account For Next Year
Many optometrists and other savvy ODoF investors choose to “front-load” their investment contributions at the start of the year. This approach often applies to HSAs, Backdoor Roth IRAs, 529 college savings plans, and even 401(k) contributions. By fully funding these accounts in early January, you give your investments as much time as possible to grow tax-advantaged throughout the year.
Cash Flow Consideration: Plan your cash flow ahead of time so you have the funds available right away in the new year. For instance, the money you had earmarked for a taxable account investment in late December can’t be double-counted for January’s upfront contributions. Careful planning ensures you’ll have the liquidity you need to front-load your accounts.
Editor Note: I personally kick off each new year by fully funding my $7,000 Backdoor Roth IRA. Doing this in early January maximizes my investment timeline for that calendar year. By front-loading your contributions, you set a proactive financial tone for the entire year ahead.
(14) Establish or Revise Your Estate Plan
A comprehensive estate plan is crucial for optometrists to ensure that their wishes are honored and their loved ones are protected. Your estate plan generally includes a will, a living trust, advance healthcare directives (living will), healthcare and financial powers of attorney, and funeral instructions. Make sure your beneficiaries are up-to-date and that all your documents are safely and securely stored.
When to Update Your Estate Plan:
- Significant changes in family dynamics (e.g., marriage, divorce, new children)
- Major shifts in assets or financial circumstances
- Changes in state or federal estate laws
- New professional or personal goals
Getting Started:
If you haven’t created an estate plan yet, now is an excellent time. For simpler situations, online platforms like Nolo, LegalZoom, or RocketLawyer can help you draft basic documents. However, if your financial landscape or family situation is complex, consulting an estate planning attorney is highly recommended. Professional guidance can ensure that your estate plan is comprehensive, legally sound, and tailored to your unique needs.
Resource:
(15) Review Your Investment Portfolio
Take the time to carefully review your investment portfolio, evaluating its performance, asset allocation, and alignment with your risk tolerance and long-term objectives. If necessary, consider rebalancing your holdings to maintain your target allocation.
This year, many individual investments have lagged behind the broader market. Though the S&P 500 may have climbed significantly (+23% year-to-date) in 2024, that performance is largely attributed to a handful of major tech stocks—particularly Nvidia (NVDA). Given these uneven returns, reassessing your portfolio now may help ensure it remains aligned with your risk profile and investment goals.
Above all, avoid chasing past performance or current market fads. Steer clear of the latest “hot” investments—whether that’s in crypto, AI startups, or any other niche capturing headlines. Every year, certain investments or managers stand out, but long-term success typically comes from maintaining a disciplined approach rather than following the latest trend.
Resources:
(16) Check If Your Financial Goals Are On Track
As a final step, assess whether you are on track to meet your financial objectives. This could include paying off student loans, saving for retirement, or accumulating funds for short-term needs like purchasing a house or securing a practice loan.
Additionally, it's prudent to ensure your investment strategy is aligned with your financial and personal goals. Regularly check your progress and consider if your portfolio requires rebalancing. This approach helps in keeping your long-term financial plan on course and responsive to any changes in your personal or professional life.
Resource:
Financial Pearl
We suggest using Personal Capital Dashboard (Empower) as a tool to monitor your net worth, savings rate, and investment returns. Update this information annually to maintain a clear financial picture. I personally review these metrics once a year as part of my end-of-year financial routine.
Summary
As an optometrist, you spend countless hours helping patients see more clearly—don’t forget to focus on your own financial “vision” too. Turn your year-end financial review into a family celebration. Set aside an hour or two with your loved ones to reflect on the progress you’ve made: the practice improvements, the retirement savings milestones, and the investments you’ve nurtured all year.
Involving your family adds meaning to the process. Show your partner and children how thoughtful money management helps create future opportunities—like fun vacations, home upgrades, or even community projects you care about. Make it a tradition: after reviewing your numbers, share a nice meal, enjoy a favorite family activity, and toast to the goals you’ve reached and the ones you’ll set next.
This isn’t just a financial check-in. It’s a time to appreciate how your hard work as an optometrist supports a better life for you and those you love, and to look ahead with optimism toward a bright and successful future as we head into 2025.
Want to learn how to build your own portfolio? Check out The Optometrist's Guide to Investing 101
Want to get a full blueprint on How to start? Check out What Should I do First? A Complete Guideline Step-by-Step
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