Year-End Money Moves: A Simple Guide to Maximize Tax Benefits

As we approach the close of the year, now is the perfect time to incorporate uncomplicated financial strategies, ensuring that you capitalize on valuable opportunities to optimize your tax benefits and enhance your overall financial standing. Here are five strategies to consider:

1. Boost Your Retirement Savings:

• Maximize 401(k) Contributions: Contribute the maximum allowable amount to your 401(k) – up to $22,500. If you're 50 or older, take advantage of the catch-up provision and add an extra $7,500.
• Individual Retirement Account (IRA): Consider contributing up to $6,500 to your IRA, with an additional $1,000 catch-up contribution if you're 50 or older.
• Utilize Health Savings Account (HSA): Make the most of your HSA contributions – $3,850 for individuals, $7,750 for families, and an extra $1,000 for those aged 55 or older.

2. Go for Roth for Tax-Free Gains:

• Explore Roth 401(k) Options: Check if your employer offers a Roth 401(k) for tax-free withdrawals in the future.
• Consider Roth IRA: Explore a Roth IRA for post-tax savings. While contributions won't reduce your taxable income now, withdrawals are tax-free in retirement if qualified.

3. Tax-Efficient Moves:

• Backdoor Roth Conversion: Convert regular savings into Roth savings by moving money from a traditional IRA or 401(k) to a Roth for tax-free cash later.
• The Magic of Mega Backdoor Roth: If allowed, use the mega backdoor Roth strategy: Max out contributions at $66,000 in 2023 ($73,500 if 50+), then convert to a Roth IRA.

4. Strategic Investment Moves:

• Strategic NSO Exercise: Exercise Nonqualified Stock Options (NSOs) wisely to minimize tax implications. Hint: It's pretty complex
• Tax-Loss Harvesting: Sell investments at a loss to offset gains, potentially saving you money on taxes. Up to $3,000 in losses can be applied against other income, with the potential to carry over remaining losses to future years.

5. Make Your Flexible Spending Account (FSA) Work for You:

• Your Health FSA: Don't leave money on the table. Spend remaining FSA funds before December 31 on medical expenses before the year-end to cut your taxes.
• Plan Ahead: Schedule check-ups, fill prescriptions, and purchase FSA-approved items to avoid losing any money. Here's a list to optimizing your FSA spending.

These simple actions can make a big difference. It's crucial to consult with a CERTIFIED FINANCIAL PLANNER? Professional to ensure these moves fit your unique situation. Let's make your finances shine in the coming year!

Note: Consult with your tax professional or your CERTIFIED FINANCIAL PLANNER? Professional for personalized advice. Contribution limits are based on the information available as of December 2023.