The countdown to 2025 has begun—are your finances ready for the new year? In this Coffee with Waymark, we highlight key financial tasks to tackle before year-end. Don’t miss these practical tips to close out the year on a strong financial note!
Key Points Discussed:
Maximizing retirement contributions
Tax strategies
Budget and spending review
Health benefits
Required minimum distributions (RMDs)
Transcript:
Hello, everyone, and welcome to another Coffee with Waymark. This will be the last Coffee with Waymark of 2024, believe it or not. But before we wrap up the year, we just wanted to come on here and give you a couple of reminders, some items you might want to consider taking care of prior to year end. So let's hop right in.
The first item I want to review is retirement contributions. So, ensure that you have contributed as much as possible to your retirement accounts. The limits for your 401k for 2024 are going to be $23,000 for employee salary deferrals, and then $69,000 for combined employee and employer contributions - meaning, if your employer contributes to your 401k, altogether (that, with your contribution) the maximum is $69,000. But if you're over the age of 50, then you're eligible for an additional $7,500 in catch up contributions. So that raises your employee deferral amount to $30,500.
So for IRAs, the limit for both traditional and Roth IRAs for 2024 is going to be $7,000 or $8,000 if you're above the age of 50. And this is a little fun fact, a lot of people don't know this, but unlike Roth IRAs, the amount you can contribute to a traditional IRA does not depend on your income, but the amount you can deduct from your taxes does depend on your income. So you just want to make sure that you are aware of those income limitations for any tax deductions that you might have.
And speaking of taxes, if you're in a higher tax bracket, you might want to talk to your CPA or your tax professional about tax loss harvesting and see if you can take advantage of offsetting any losses for this year. And you also want to make sure that you take care of any charitable contributions that you might have for this year prior to year end so that you can include that come tax season.
The second item I want to touch on is annual spending and budget. So if you're like me and you track your expenses on a year to year basis, this is a really good time to track your year to date spending and see how you did, you know, see if you're on track, see if there's any room for improvement for next year. And if you have a holiday budget, it might be a little too late now, but you maybe want to review your holiday budget. And if you don't have one, maybe consider setting one for next year, and then also plan on any 2025 expenses as well.
The third item I want to go over is health benefits, so HSAs and FSAs. The annual limit for HSAs or health savings accounts is going to be $4,150 for individuals, or $8,300 for families. And your HSA does typically carry over and a lot of people use this well into retirement to take care of any medical or health expenses that they incur. And this is different from an FSA or flexible spending account, because FSAs are typically “use it or lose it” accounts. But you want to check in with your plan provider and see if they allow for any carry overs or grace periods. And if they don't, then definitely use those funds for any health expenses that you have incurred in the 2024 tax year.
If you're over the age of 73, you want to ensure that you've taken your RMDs from your qualified retirement accounts, and this is to avoid any potential penalties. So over the age of 73, definitely make sure you take your RMDs. And lastly, but definitely most importantly, make sure that you enjoy the last month of 2024 with loved ones.
Here at Waymark, we are very much looking forward to seeing what 2025 has in store, keeping you guys updated and as always be well and do good, and we'll see you next year.
Hanifa Nankinga, MBA is Client Services Manager for the Waymark team, handling client intake, scheduling, back-office support services, systems management, and various financial report generation. She excels at client relationship management and advisor process facilitation. Her passion for helping clients reach their financial goals is driven by a desire to make a tangible impact on their lives beyond money.
Prior to joining Waymark, Hanifa earned a BSBA in finance and management and an MBA in finance from the University of Massachusetts Lowell. She has extensive experience in the finance industry with positions in both big companies like Putnam Investments and smaller credit unions in her hometown of Dracut, MA. While originally from Uganda, Hanifa has lived in Dracut since she was 4 years old and recently moved across the country to Arizona. Her relocation was inspired by her love for outdoor activities, such as hiking and golfing, which she is now able to participate in year-round while maintaining a strong commitment to staying fit and active.
Drawing on her financial expertise and her life journey from Uganda to Dracut and now Arizona, Hanifa's commitment to enhancing clients' financial well-being, along with her passion for an active and purposeful life, remains the driving force behind her mission, exemplifying Waymark's dedication to excellence and holistic well-being.