Before You Toast in the New Year, Be Sure to Have Your Year-End Finances in Check; CFA Institute Provides Investors With a Checklist of End-of-Year Financial Deadlines to Help with Financial Planning for 2005.

CHARLOTTESVILLE, Va. -- December 31 not only signifies the end to the calendar year, but also marks the last day for investors to complete their year-end financial planning prior to the start of 2005. While investors' thoughts during the holiday season may be more focused on gift lists than economic checklists, it is important to be mindful of the looming end-of-year deadlines that may affect 2004 taxes and 2005 financial planning. CFA Institute, the administrator of the Chartered Financial Analyst(R) (CFA(R)) program worldwide, has compiled a list of the year-end deadlines and tips for getting investors' finances in order prior to New Year's Eve.

"Many investors do not even begin to think about their finances until early in the year, closer to April 15. But by waiting that long, you might miss out on some important deadlines that may impact your taxes and portfolio," said Bob Bilkie, CFA, president of Sigma Investment Counselors in Southfield, MI. "Year-end is a great time to give your portfolio a checkup and may even result in maximizing your after-tax wealth."

CFA Institute compiled the following tips and deadlines to help investors plan their year-end finances.

1. Recognize Retirement Planning Deadlines. The end of the year brings numerous deadlines for retirement planning. December 31 is the last day to establish and fund a solo 401(k) and is the last day to complete the year's contributions to employee-sponsored 401(k) plans. It also is beneficial to make annual Traditional or Roth IRA contributions at this time, up to $3,000 (people 50 and older can put in an extra $500). Although investors have until April 15, 2005 to make a 2004 IRA contribution, the sooner an investor invests his money, the more time it has to potentially benefit from compound growth. Keep in mind that December 31 falls on a Friday this year and is the absolute last day to wrap up many transactions.

2. Make Charitable Donations and Gifts for the Year. December 31 is the last day to make tax-deductible charitable donations. By giving appreciated securities such as stocks that have been owned for more than one year, investors can realize significant tax savings. Investors who give in the form of an appreciated security will be able to deduct the current value of charitable contributions at the time of the donation from their adjusted gross income while avoiding future capital-gains taxes. In addition, you can give up to $11,000 per person and pay no gift tax, but the deadline for 2004 is December 31.

3. Re-Evaluate Stock Market Holdings. To offset capital gains, investors may want to review their portfolio and sell stocks that have declined in value. If losses exceed gains, an investor can deduct up to $3,000 of losses from ordinary income. If there are large, long-term capital gains in a portfolio that you have cashed in over the past year, you will generally be taxed at 15 percent, which is beneficial when taking into account that the top rate on ordinary income is 35 percent.

"This year, capital gains rates were among the lowest in decades," said Bilkie. "Capital gains could be going up next year and if you do have capital gains on stocks, take that into consideration and perhaps sell."

4. Re-Evaluate Financial Goals. Use the holiday time to reevaluate your financial goals and make plans to help you succeed in achieving them. If your priorities and goals have changed during the year, then make sure your portfolio is engineered to help you meet these changes.

"A cost saving tip is to organize your records during some of the holiday downtime," said Brian Breidenbach, CPA, CFA, managing principal of Briedenbach Capital Consulting in Louisville, KY. "Having organized records, especially information such as the original price of an asset, can save you time and money down the road."

5. See Where You Stand. Before investors can recognize what needs to be completed by end-of-year, it is helpful to make projections of 2004 income taxes. Additionally, check to see if you will have to pay the Alternative Minimum Tax (AMT) before assuming deductibility of expenses. Investment activities play a major role in how much AMT an investor may pay and could affect how to qualify private activity bonds, qualified small business stock, incentive stock options and investment expenses.

"Be prepared this year and know the important financial deadlines," said Briedenbach. "Remember that proactive planning is always better than reactive planning. By taking inventory of what you own and may owe, you'll ring in the new year with a renewed sense of confidence. Make this year's resolution to make financial planning a year-round exercise in 2005."

About CFA Institute:

CFA Institute is the global, non-profit professional association that administers the CFA curriculum and examination program worldwide and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has 76,000 members in 116 countries. Its membership includes the world's 57,000 CFA charterholders, as well as 130 affiliated professional societies in 51 countries. CFA Institute is headquartered in Charlottesville, Va., with additional offices in London and Hong Kong. It was formed as the Association for Investment Management and Research in 1990 from the combination of the Financial Analysts Federation (formed in 1947) and the Institute of Chartered Financial Analysts (formed in 1962). More information may be found at www.cfainstitute.org or by calling 1-800-247-8132 or 1-434-951-5499.

Note to Editors:

The Chartered Financial Analyst(R) (CFA(R)) program is a globally recognized standard for measuring the knowledge and commitment of investment professionals. Those who have earned the CFA charter have completed a rigorous, three-year course of independent study that includes three sequential, six-hour exams on securities analysis, financial accounting, quantitative analysis, economics, portfolio analysis, ethics and professional standards. "Chartered Financial Analyst(R)" and "CFA(R)" are trademarks owned by the CFA Institute. Therefore, "Chartered Financial Analyst" should always be capitalized, and both the full name and the letters CFA should be used as adjectives to quality nouns. It is also appropriate as a three-letter designation after an individual's name. Examples: "James Smith, CFA"; "He holds the Chartered Financial Analyst designation"; "The Chartered Financial Analyst Program"; "He earned the CFA charter"; "As a CFA charterholder, he..." The most common misuse is to refer to an investment professional as "a chartered financial analyst" or "a CFA."