(ARA) - With good planning, you can start the year off right by making sure you and your family are financially fit and ready for the new year, and possibly reduce your tax bill. Here is a financial checklist to consider:

Tap into the Power of Tax-Deferral

If you are thinking of investing in mutual funds for long-term or retirement savings, purchase a variable annuity. You've got the 1099 forms for 2000 already from any mutual funds you own. If you have a tax bill this year, you'll likely wait until April 15 to pay it, to give the money extra time to work for you. What if you had the option to wait 10 or 20 years to pay? That's tax-deferral. You control when you pay taxes on your money so you can get the maximum mileage out of your investment earnings.

Variable annuities provide tax-deferred investments -- you pay no taxes on the earnings until you actually withdraw the money, and you receive no tax assessment during the accumulation phase. You can also move money between the funds within your annuity without incurring taxes, and you can invest in VAs at any time without negative tax consequences.

Many mutual funds pay taxable dividends and you will be taxed on any gains from stocks or funds sold during the year. Keep in mind that variable annuities typically carry mortality and expense charges, administrative fees, and deferred sales charges that can reduce tax-deferred performance. Withdrawals of the tax-deferred earnings are taxed as ordinary income, and surrender charges may apply, in addition to a 10 percent tax penalty for withdrawals before age 59 1/2.

Protection for You and Your Family

Review your insurance and savings plans, including homeowners, auto, life, health and disability insurance, retirement plans and investments to make sure you have done everything necessary to prepare for the future. Insurance protects against unforeseen events, such as storms, accidents, disability, illness or death.

Check Your Reimbursable Medical and Child Care Accounts

If, by year-end, you haven't used all the dollars in a pre-tax medical or child care spending account, you could forfeit all the money remaining. Near year-end, if you have money remaining, you may want to schedule an eye, dental or physical exam, or stock up on prescriptions.

Put Your Bonus in Your Employer-Sponsored Pension Plan

If you haven't maxed out on your pre-tax contribution allowable (usually $10,500 per year for 401(k) plans), ask if you can put part, or all, of your bonus into that account.

Maxed Out on Your Employer-Sponsored Pension or IRA?

Consider a variable annuity. Only annuities can provide guaranteed income for life upon retirement, and many variable annuities offer flexibility and a wide choice of investment options, ranging from guaranteed interest accounts to aggressive investment underlying funds. Guarantees are subject to the claims-paying ability of the issuing insurance company, so be careful to choose an insurer with a solid financial history.

Consider Giving Away Some of Your Money

A charitable contribution, such as to your church, alma mater or other worthy cause, can be tax deductible. You can also give away as much as $10,000 annually to as many people as you'd like without incurring the federal gift tax ($20,000 per couple).

Consult a Financial Planner

If financial planning is important to you, it may be worth your while to consult a financial planner to discuss strategies for saving taxes, maximizing your investments, and making sure you cover as many contingencies as possible.

Using a checklist will help you achieve your goals of deferring income, accelerating deductions and taking advantage of tax credits. Smart planning involves more than just reviewing the past year -- it means looking ahead to the next year as well.







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