New Year, New Opportunities

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!