Taxes, Taxes and More Taxes

With the start of the new year comes everyone’s favorite time of the year, filing our income taxes.? Even though the calendar has flipped years, many of us still have an opportunity to take advantage of some 2023 tax opportunities.? One of the biggest areas of opportunity are IRA’s.? If you had earned income in 2023, you may still be able to contribute to a traditional or Roth IRA.? The IRA contribution limits for 2023 were $6,500 for those under the age of 50 and $7,500 for those age 50 and older.? Remember that even if you have an employer sponsored retirement plan, you still may be able to take advantage of contributing to an IRA.? Consult your tax professional to see if this is something you can take advantage of.?

Now is also a great time to create a plan for tax time 2024.? When creating a plan, you should look at including a plan that considers future taxes and a goal of optimizing retirement distributions.? A good plan starts with the end in mind.? Below are some areas you should consider:

• Use of Employer Retirement Plans – Employer retirement plans have become the vehicle many US workers use to help fund their retirement.? When looking at your employer’s plan, look to see if your company is one of the 50% of plan sponsors who offer both a traditional and Roth 401(k).? It may be beneficial to utilize both options as each offer different benefits.
• Roth Conversions – A Roth IRA conversion allows an individual to transfer pre-tax dollars from a traditional IRA directly to a Roth IRA account.? Anyone can perform this conversion, but you must keep in mind that taxes will be due on the converted dollars in the year you convert them.? Once converted, the assets grow tax-free and qualified distributions are tax-free.?
• Health Savings Account, (HSA) – A health savings account is an account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses.? This account has a triple tax advantage; up-front tax deduction, tax-free growth and tax-free withdrawals.? This triple advantage makes an HSA a top-notch way to save for retirement medical expenses.?

By looking ahead and beginning to plan now, you can take proactive steps to better position your future retirement savings while at the same time positively impacting your 2024 tax picture.? Learn more by contacting me at [email protected]?

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.?

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ? or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.