October is Financial Planning Month, an observance to
emphasize the importance of sound financial planning. While good financial
planning is a year-round effort, here are some important steps in different
financial planning categories to take to ensure that you are positioned well
for the remainder of 2024 and beyond.
Retirement Planning
Maximize contributions to your workplace plans and Health
Savings Accounts (HSAs). Employee contribution limits for 401(k)s are
$23,000 for 2024, while employees 50 and over can contribute an additional
$7,500 to their 401(k)s. For employees enrolled in high deductible health plans
(HDHPs) Health Savings Account contribution limits are $4,150 for
self-coverage, and $8,300 for family coverage. Those 55 and older can make an
additional $1,000 catch-up contribution.
Maximize your Roth IRA contributions. If you are
eligible, make sure you maximize your Roth IRA contributions by year-end, or at
the very latest by the tax filing deadline in April 2025. Contribution limits
for 2024 are $7,000 per individual, and $8,000 for individuals aged 50 and
over. Earnings limits apply for Roth IRA contributions.
Explore Roth IRA conversions. While we have lower
income tax rates through the remainder of 2024 and 2025 you may pay fewer
overall taxes if you convert pre-tax IRA and 401(k) assets to a Roth account.
Investments
Realize Capital Gains and/or Losses. The last quarter of the year is a good time to examine gains and losses in your taxable investment accounts. Portfolio losses may be able to offset current or future capital gains, minimizing taxes owed.
Rebalance Your Portfolio. Over the course of the year, your portfolio mix can drift from your target. Rebalancing can bring your investments back in line with your financial plan. Special care should be taken with taxable accounts that may be subject to capital gains tax.
Revisit Your Fixed Income Investments. The Federal Reserve has eased interest rates, with more cuts expected for the remainder of 2024 and into 2025. Are your fixed income investments positioned properly for the impending rate cuts?
Risk Management
Review Your Insurance Policies. With housing prices booming over the past several years it is important to review your homeowner’s insurance policy to ensure that the new value of your home is protected from loss adequately. Are your life insurance beneficiaries up to date? There is no simpler way to ensure your loved ones are protected than to review your beneficiaries every year.
Enroll in Your Workplace Health Plan. Autumn is the time of year for enrolling in next year’s employee benefit plans. Enroll in the health plan that best meets your family’s needs and budget.
Estate Planning and Charitable Giving
Review Your Beneficiaries. As mentioned earlier, the last quarter of the year is the perfect time review all your beneficiary designations as your family situation may have changed because of births, deaths or divorce. Annuities and life insurance contracts, traditional and Roth IRAs and 401(k)s and other estate planning instruments can easily be updated to reflect your family’s changing needs.
Giving and Gifting. The fourth quarter of the year is an ideal time to consider gifting strategies to family members and giving to your favorite charitable organizations. Seniors over the age of 70 ½ who plan to give to charities can maximize their donation and minimize their tax obligation by employing the use of a Qualified Charitable Distribution (QCD). Special rules apply, so be sure to contact your legal or tax advisor or Bollin Wealth Management to make sure the QCD is executed correctly.
Taxes
Fill Up Your Tax Brackets. Today’s lower tax rates will
not likely be around forever, so take advantage of them while you can. Roth
conversions, realizing capital gains and accelerating income into 2024 from
future years are three ways you can fill up your lower tax brackets and save on
future income taxes.
Take Care of Your RMDs. If you are 73 year or older
and own pre-tax IRAs or 401(k)s you will need to take a required minimum
distribution (RMD) from your account(s) before year-end.
Do not Wait for Your RMDs. Uncle Sam will allow you
to defer distributions from your traditional IRA and 401(k) until age 73 (75 in
the future), but there is nothing preventing you from taking out of your IRA or
401(k) earlier. Pulling money out of your pre-tax retirement accounts at
today’s low tax rates may save you tens or hundreds of thousands of dollars in
future tax obligations.
We Are Here to Help
We realize that this checklist of items to review is complicated, but you don’t have to go it alone. Call our office at 419-878-3934, email us, or use our calendly application (https://calendly.com/bollinwealth) today to schedule time to review these items together before it is too late!