Maximize your retirement savings before 2024 ends! Discover essential strategies to boost your retirement accounts, minimize tax burdens, and set yourself up for financial success in the new year.
As 2024 draws to a close, now is the perfect time to assess your retirement accounts and make strategic moves to secure your financial future. By acting before the year ends, you can take advantage of tax benefits, optimize your savings, and ensure your retirement plans are on track. Here's a comprehensive guide to help you navigate the year-end retirement planning process.
Year-end planning offers several benefits, including:
Taking these steps now can save you money and reduce stress during tax season.
Start by assessing all your retirement accounts, including 401(k)s, IRAs, and other plans. Key areas to evaluate:
If you haven’t reached the contribution limits for your retirement accounts, now is the time to act:
Maximizing contributions not only boosts your savings but can also provide significant tax advantages.
If you’re 73 or older (or 72 if you turned 72 before 2023), you’re required to take RMDs from your retirement accounts. Failure to do so can result in a penalty of 25% of the amount not withdrawn. Ensure you:
RMDs do not apply to Roth IRAs during your lifetime, but they do for inherited accounts, so plan accordingly.
A Roth conversion involves transferring funds from a traditional IRA or 401(k) to a Roth IRA. While you’ll pay taxes on the converted amount now, the funds will grow tax-free, and withdrawals in retirement are tax-free. Key considerations:
If your employer offers a 401(k) match, ensure you’re contributing enough to take full advantage. Employer matches are essentially free money for your retirement, so don’t leave it on the table.
Life changes, such as marriage, divorce, or having children, may require updates to your beneficiary designations. Ensure:
Outdated information could lead to unintended consequences for your loved ones.
HSAs are a powerful retirement planning tool for those with high-deductible health plans. Contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free. If you haven’t maxed out your HSA contributions for 2024, consider doing so before year-end.
Year-end is an ideal time to evaluate your overall tax situation and how your retirement accounts fit in. Consider:
A tax professional can help identify opportunities tailored to your circumstances.
Set up automatic contributions to your retirement accounts to ensure consistent saving. Many plans allow you to adjust the amount as needed.
Review your portfolio to ensure it’s diversified across asset classes, industries, and regions. Diversification reduces risk and enhances long-term returns.
Leverage apps and calculators to track your progress and model different scenarios. Popular tools include:
A financial advisor can provide personalized advice, helping you navigate complex decisions and stay on track for your retirement goals.
For 401(k)s, contributions must be made by December 31, 2024. For IRAs, you have until April 15, 2025, to contribute for the 2024 tax year.
Yes, but the combined contributions cannot exceed the annual limit ($6,500 for 2024, plus $1,000 if you’re over 50).
A Roth conversion may be beneficial if you expect to be in a higher tax bracket in retirement or if you’re looking to reduce future RMDs. Consult with a tax professional to weigh the pros and cons.
Missing an RMD can result in a 25% penalty on the amount not withdrawn. If you realize the mistake quickly, you may be able to request a waiver from the IRS.
Taking these steps before 2024 ends can significantly enhance your retirement savings and reduce stress during tax season. By maximizing contributions, staying compliant with RMDs, and leveraging tax-saving strategies, you’ll be well-positioned for a secure financial future. Start planning today and consult with professionals to make the most of your retirement accounts.
Being audited is comparable to being struck by lightning. You don't want to practice pole vaulting in a thunderstorm just because it's unlikely. Making sure your books are accurate and your taxes are filed on time is one of the best ways to keep your head down during tax season. Check out Vincere's take on tax season!
This post is just for informational purposes and is not meant to be legal, business, or tax advice. Regarding the matters discussed in this post, each individual should consult his or her own attorney, business advisor, or tax advisor. Vincere accepts no responsibility for actions taken in reliance on the information contained in this document.
For business tax planning articles, our tax resources provides valuable insights into how you can reduce your tax liability now, and in the future.
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