(MONEY Magazine) – Your schedule is being hijacked by holiday dinners, back-to-back school pageants, road trips to visit relatives and, of course, shopping, shopping, shopping. Who has time for financial planning? But your portfolio isn't taking a holiday. Deadlines are approaching for key investment and tax decisions that could make a big difference to your net worth. Put down that eggnog--at least for a moment--and consider the following year-end moves.

INVESTMENTS

1. Revisit your asset allocation. Until recently, who wanted to open a portfolio statement (much less crunch the numbers inside that portfolio)? But go ahead. With the stock market up 19% this year, you may be pleasantly surprised by your gains. That's all the more reason to rebalance your asset allocation. As wise investors know, sticking to a target mix of stocks and bonds is key to achieving the returns you need at a risk level you can tolerate. Most folks today will find that their portfolios have shifted away from their intended allocations because of market moves. If your portfolio held 60% in stocks and 40% in bonds back in 2002, for example, market gains may have raised your equity level to 70%. If that's too risky for your taste, you should transfer enough of that equity money into fixed-income assets to restore your original allocation.

Rebalancing is a breeze in most 401(k)s, since there are no taxes and few, if any, costs involved: Just pick up the phone or go online to shift your money. But in taxable portfolios, rebalancing gets more complicated, since trading between accounts may result in transaction fees and tax bills. Keep in mind, though, that selling an asset may present an opportunity to take losses to offset taxable gains. (See page 210.)

Don't want to sell any stocks or funds? A painless, if slower, way to re-allocate is to redirect new contributions to your accounts. For example, if you are making regular contributions to a stock fund but wish to build up your fixed-income assets, then divert those contributions to a bond fund until you reach the correct asset level.

2. Shift assets to take advantage of new tax breaks. The tax law that took effect this past spring offers great breaks to investors. The levy on qualifying stock dividends dropped from the ordinary income tax rate to just 5% to 15%, depending on your tax bracket; the long-term capital-gains rate, formerly as high as 20%, also fell to a maximum of 15%. To take full advantage of those breaks, you now need to consider which assets belong where: in taxable or tax-advantaged accounts. Funds that track broad indexes like Standard & Poor's 500-stock index or Wilshire's 5000-stock index are ideal for taxable accounts because they are relatively tax-efficient, says Francis Kinniry, a principal at Vanguard. Stock funds that trade actively, racking up short-term capital gains, belong in tax-deferred accounts. (See the table at right for more suggestions.) Bear in mind, these tax breaks aren't permanent--the law is set to expire after 2008--so avoid sweeping changes in your portfolio. But if you're making new investments or rebalancing, a few tax-savvy tweaks make sense.

3. Grab savings bond deals while you can. On Nov. 3 the Treasury made its regular six-month adjustment to the interest rates on savings bonds: to 2.19% for inflation-adjusted I Bonds. That's a big drop from the previous I Bond rate of 4.66%, but it's still twice the yield on most money-market funds today. And you get a slightly higher payout on EE savings bonds, which now yield 2.61%.

Here's the act-fast part: If you've got a sizable amount to stash away in savings bonds, you still have time to take advantage of a great deal that--alas--disappears at year-end. Until Dec. 30 you can purchase savings bonds online using a credit card, which may enable you to earn hefty rebates, frequent-flier miles or other rewards, depending on your card's policies. You can charge up to the $30,000 annual limit on your online savings bond purchases. If your card offers, say, a 2% cash-back rebate and you bought $15,000 worth of bonds, that would mean $300 in your pocket. But you must purchase the bonds via the Treasury's Savings Bonds Direct website, publicdebt.treas.gov/ols/olshome, which will be shut down at the end of the year as part of a revamp of the government's savings bond sales operations. Investors can still make online savings bond purchases through Treasurydirect.gov, a newer website, by setting up a link to their bank accounts.

BENEFITS

4. Budget for rising health-care costs. This is the time of year when many companies sponsor benefits-enrollment periods. But choosing a health plan is not business as usual--expect to pay more. Faced with double-digit hikes in their medical bills, employers are overhauling their plans and pushing more expenses onto employees in the form of higher co-payments, premiums and out-of-pocket costs. Indeed, employees are paying an average of 30% of total health-care costs in 2003, or $2,126 per person, up from 25% of costs ($1,014) in 1998, according to benefits consultancy Hewitt Associates. "Next year health-care costs are likely to jump 12% to 14% for employees in larger companies," says Tom Beauregard, a health-care-practice leader at Hewitt. "Costs at mid-size and small companies are likely to rise even higher--15% to 20%."

Even if you intend to stick with your current health plan, double-check the terms of coverage. "Many plans are changing or limiting the type of expenses that will be reimbursed," warns Martha Priddy Patterson, director of employee-benefits policy analysis at Deloitte & Touche. "A procedure that you thought was covered may not be fully reimbursed next year."

To further curb health-care expenses, some employers are introducing a new type of medical coverage: the so-called consumer-driven plan, which offers less comprehensive care at lower cost. It carries a steep deductible, usually $1,000 or more, and is coupled with a health-care reimbursement account (HRA) to which the employer contributes a set amount (typically less than the deductible). The employee can draw on the HRA for medical expenses during the year, and unused money can be rolled over into the following year. Young workers with no dependents may find this option appealing, but think twice before signing up: You are basically gambling that your medical costs will not exceed the amount in your HRA.

5. Take advantage of expanded flexible spending account expenses. One way to take the sting out of stingier benefits is to make full use of a flexible spending account (FSA)--and new Internal Revenue Service rules may make it easier to claim FSA money next year for everything from Claritin tablets to treadmills. At most big companies this time of year, you can have a set amount deducted from your paycheck, free of taxes, into an FSA to pay for qualified health-care or day-care expenses, including out-of-pocket medical costs and preschool tuition. The most you can legally set aside for day-care expenses rises from $5,000 to $6,000 next year; the medical FSA limit is set by your plan, typically $3,000 to $5,000. Whatever your total, the tax savings are hard to beat: Someone in the 33% bracket who stashes $5,000 in a health-care FSA saves $1,650. There's a drawback, however: Any FSA money not spent by the end of the year is lost. (You must incur the expense by year-end--get moving!--although you have until the following April 15 to file the claim.)

Now the icing: The IRS recently ruled that costs of certain over-the-counter drugs, such as allergy medications and antacid tablets, and home exercise equipment (if used to treat a doctor-diagnosed disease, including obesity) may be reimbursed through an FSA. Check with your employer to see if such claims will be allowed in your plan.

The IRS has also given the okay for employers to offer FSA debit cards, which may eliminate reimbursement paperwork. Similar to bank-issued debit cards, FSA debit cards are programmed to tap directly into your FSA account to pay for qualified medical expenses (and only those expenses). In other words, you won't have to file a claim when you use the card. Several major benefits providers, including Fidelity and Hewitt, now offer FSA debit cards, so ask your employer about getting one.

6. Stuff the new max into your retirement accounts. Now's the time to make sure you are making the most of your 401(k) and IRA plans. Starting next year, you can put away as much as $13,000 in a 401(k), up from $12,000 in 2003. And those 50 or older can make extra contributions to their 401(k)s--up to $2,000 this year and $3,000 in 2004. (To be eligible, you don't have to be 50 at the start of the year but must reach that age by Dec. 31.) And don't forget: You or your spouse may also be eligible to put additional money into an IRA--as much as $3,000 annually this year and next, plus $500 in catch-up contributions for those 50 and older.

What if you just can't save the full amount in your 401(k) plan? At least contribute enough to earn the full match from your employer--you don't want to walk away from free money.

TAXES

7. Use your capital losses to reduce your taxable income. There's a mixed blessing in this year's market rebound: You may be facing the not unpleasant problem of minimizing taxes on gains. Look to your losses--you undoubtedly still have investments that are underwater--and use them to offset your taxable gains.

Execution can be tricky: The IRS requires that you first match short-term gains (on investments held for a year or less) with short-term losses, and long-term gains (more than a year) must be applied against long-term losses. It gets even trickier this year because long-term gains generated before May 6 get taxed at the old rate. Yep, an investor in the top bracket will pay 20% on pre-May 6 gains and 15% on gains made on or after May 6.

You can also deduct against your income up to $3,000 of losses in excess of gains. What if you've racked up more losses than you can use this year? As always, you can carry those unused losses into future years--charmingly called a net capital-loss carryover--to offset future capital gains and income.

8. Cut your taxes by investing in a 529 college savings plan. They're not for everyone, but 529 savings plans can be a fine deal for high-bracket families who are not depending on financial aid. Offered by 49 states plus the District of Columbia, 529 plans typically let nearly anyone contribute as much as $250,000 (even more in some places) to pay for college on behalf of nearly any beneficiary. That money grows tax-free, as long as it's used to pay higher education expenses. (The tax-free status will end after 2010, unless Congress renews the tax law; the gains will be taxed at the student's rate.) Plus, more than half the states offer a deduction--often a substantial one--on your contributions. Married couples filing jointly in New York, for instance, can deduct up to $10,000. In most states, you must make your contribution before year-end to qualify for a deduction--so don't delay.

9. Buy a computer--or even an SUV--and deduct it as a business expense. The new tax laws have raised the limit on the amount small businesses can deduct for qualified equipment--from laptops to off-the-shelf software (which previously was excluded)--from $25,000 to $100,000 for 2003. (The higher limit will also be in place for 2004 and 2005.)

You can also enjoy the expanded deductions if you need a car, van or truck in your business. Vehicles that weigh at least 6,000 pounds are eligible for the $100,000 equipment write-off. The deductions are available for 2003 as long as you bought the vehicle after May 5 but before year-end. So if you purchase, say, a $40,000 Chevy Suburban today and use it exclusively for business purposes before Dec. 31, you can deduct the entire cost of the SUV on the company's 2003 tax return, even if you finance most of the vehicle's cost. Talk about a holiday bonus.

ADDITIONAL REPORTING BY TARA KALWARSKI