If part of your New Year Resolution was to save more or gift more, you may be in luck because, with the new year, comes new opportunities.
Just to name a few, you can now:
1. Earn Interest on Cash! (When was the last time you could say that?)
- Money market funds, including Schwab’s, are paying upwards of 4.25%
- 1 Year Treasury Bills are yielding over 4.5%
- Note: If you hold your cash in a savings account at your bank, you’re probably still earning less than 0.50%
2. Contribute $22,500 to your 401k plan -- $30,000 (including a $7,500 catch-up contribution) if you’re 50 or older!
- You can also contribute more to an IRA ($500)
- Note: Beginning in 2024, all catch-up contributions to a 401k will be required to be Roth (after-tax) contributions
3. Receive a greater employer match in your retirement plan
- The maximum income on which your employer will match increased from $305,000 to $330,000 – that’s an extra $1,250 at a 5% match
4. Gift $17,000/year per person without affecting your lifetime estate tax exemption
- A married couple could gift to their married child and spouse a total of $68,000 – even more if they have children
5. Make Roth contributions in a SIMPLE or SEP IRA
- Previously, only pre-tax contributions were allowed
The Secure Act 2.0 passed in December 2022 will also allow for additional planning opportunities beginning in 2024 and beyond including:
- 529 Plan to Roth Conversions
- Increasing the Required Minimum Distribution age to 73
- Treating student loan payments as elective deferrals for employer matching purposes in workplace retirement accounts; allowing student loan borrowers to benefit from an employer match even if they can’t afford to contribute to their retirement plan
- Increasing Catch-Up contributions to employer retirement plan for those age 60-63
Cheers to a new year of planning opportunities!