Maximizing Your Retirement Accounts Before Year-End: A Guide for Attorneys

As an attorney, your career is demanding, and often your financial planning can take a back seat to client work, court deadlines, and billable hours. But with the end of the year approaching, now is the perfect time to focus on one of the most important aspects of your financial health—retirement savings. Whether you're a partner in a firm, an associate, or an in-house counsel, there are strategies you can employ to make the most of your retirement accounts before the calendar resets.

In this article, I’ll walk you through key retirement strategies as the year draws to a close.

1. Max Out Your 401(k) Contributions

The 401(k) is often the backbone of many professionals’ retirement strategies, and attorneys are no exception. For 2024, you can contribute up to $23,000 if you're under 50, and $30,500 if you're 50 or older.

Why this matters:

Maximizing your contributions not only boosts your retirement savings, but it also reduces your taxable income, potentially saving you money when you file your taxes next year.

What to do:

Check your 401(k) contributions today to ensure you’re on track to hit that limit before December 31. If not, consider increasing your contributions over the next few months. You might also want to ask your employer about making catch-up contributions if you're over 50.

2. Consider a Backdoor Roth IRA

If you’re a high-income earner (which many attorneys are), you might find yourself ineligible to contribute directly to a Roth IRA due to income limits. However, there’s a way around this—through a Backdoor Roth IRA.

Why this matters:

A Backdoor Roth IRA allows you to convert traditional IRA contributions into a Roth IRA, which grows tax-free. This can be especially advantageous in the long run, as your income increases over time.

What to do:

Before the end of the year, talk to your financial advisor about whether a Backdoor Roth IRA is the right move for you. It’s a smart way to save on taxes later in life, especially if you expect to be in a higher tax bracket during retirement.

3. Make the Most of SEP-IRAs (If You Have Side Income)

Many attorneys supplement their income through consulting, speaking engagements, or contract work. If this applies to you, consider setting up a SEP-IRA (Simplified Employee Pension) to save more for retirement on that additional income.

Why this matters:

A SEP-IRA allows you to contribute up to 25% of your earnings from self-employment income, up to a maximum of $66,000 for 2024. Plus, contributions are tax-deductible, which can reduce your taxable income significantly.

What to do:

If you’ve earned additional income this year, a SEP-IRA could be a powerful way to set aside more for retirement while reducing your 2024 tax bill. You have until the tax filing deadline (plus extensions) to make contributions, but planning ahead before year-end can help you save more.

4. Don’t Forget About Your HSA

If you have a Health Savings Account (HSA) and you’re enrolled in a high-deductible health plan, this can be another effective retirement savings vehicle. The beauty of an HSA is that contributions, growth, and withdrawals for medical expenses are all tax-free.

Why this matters:

While HSAs are typically thought of as health-related savings accounts, they can actually serve as a backup retirement account, especially if you’re not using the funds for medical expenses now. By contributing the maximum ($3,850 for individuals, $7,750 for families in 2024), you can let the account grow tax-free and use the funds in retirement.

What to do:

If you haven’t maxed out your HSA yet, consider doing so before the end of the year. The contributions you make are pre-tax, lowering your taxable income.

5. Reevaluate Your Asset Allocation

As the year ends, it’s a good idea to reassess your asset allocation—the mix of stocks, bonds, and other investments in your retirement portfolio. Attorneys often face fluctuating income, so your portfolio should reflect your risk tolerance and time horizon.

Why this matters:

A well-diversified portfolio is key to long-term growth. As you progress in your career, your risk tolerance may shift, and your portfolio should evolve with it.

What to do:

Review your retirement accounts to ensure your investments are aligned with your current financial goals. If needed, rebalance your portfolio to maintain a suitable mix of assets.

The Bottom Line

As an attorney, your schedule may be hectic, but taking time to review your retirement accounts and maximize contributions before the year ends can set you up for long-term financial success. Whether it’s contributing to a 401(k), considering a Backdoor Roth IRA, or exploring the benefits of an HSA or SEP-IRA, now is the time to act.

If you’re unsure where to start or need help optimizing your retirement plan, feel free to reach out. As a wealth advisor specializing in financial planning, I’m here to help you make the most of your financial future. We offer complimentary strategy sessions and would be happy to discuss things further.

This article represents the opinion of Wealth Standard Financial. It should not be considered as providing investment, legal, and/or tax advice. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult your financial advisor.