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As the year-end approaches, it’s an excellent opportunity to maximize retirement contributions and lock in valuable tax benefits.
Retirement accounts such as 401(k)s, IRAs, and Health Savings Accounts (HSAs) offer unique advantages, including tax deferral, tax deductions, and, in some cases, tax-free growth. By fully utilizing these opportunities, you can reduce your taxable income, enhance your long-term savings, and take full advantage of employer matches or tax credits. Ensuring you contribute as much as possible before deadlines can significantly impact your retirement readiness and current tax liability.
Max Out Your 401(k) Contributions
For 2024, employees under 50 can contribute up to $23,000, while those aged 50 and older can add $7,500 in catch-up contributions for $30,500. Review your current contributions to see if you can increase your payroll deductions before the year ends. Many employers offer online portals where adjustments can be made quickly. Additionally, ensure you’re contributing enough to receive any available employer match—a benefit often described as “free money.”
Boost Contributions to Traditional and Roth IRAs
While the contribution limit for IRAs is $7,000 (or $8,500 for those 50 and older) in 2024, the deadline to make these contributions extends to the tax filing date, typically April 15, 2025. Consider setting up automatic contributions to reach the limit steadily. Traditional IRA contributions may be tax deductible, depending on your income and participation in an employer-sponsored plan, while Roth IRAs benefit from tax-free withdrawals in retirement.
Leverage the Power of HSAs
If you have a high-deductible health plan, HSAs provide a triple tax advantage: contributions are tax-deductible, growth is tax-deferred, and withdrawals for qualified medical expenses are tax-free. For 2024, individuals can contribute up to $4,150 and families up to $8,300, with an additional $1,000 catch-up for those 55 and older. Maxing out your HSA by year-end can enhance your healthcare and retirement savings strategies, as unused funds roll over indefinitely.
Next Steps to Maximize Year-End Opportunities
• 401(k) and HSA Deadlines: Contributions to 401(k) and HSA accounts must be made by December 31, 2024, to count toward the 2024 tax year. Check your contribution levels and adjust payroll deductions to maximize contributions before the year-end deadline.
• IRA Contribution Deadlines: Contributions to Traditional and Roth IRAs can be made until the tax filing deadline (April 15, 2025). However, starting now can help you reach the annual limit without the pressure of last-minute funding.
If you can, this is the perfect time to act and review your contributions to identify opportunities to optimize, reduce your taxable income, and set yourself up for a more secure retirement. If you’d like to discuss where your best opportunities lie, don’t hesitate to reach out!
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.
1. III.org, 2024
2. Census.gov, 2024