2024 Resolution: Set Your Financial Strategy Now, Benefit All Year (And Beyond)
Leisl L. Langevin, CFP®, CDFA®
Senior Vice President & Financial Advisor
As 2024 gets underway, the resolution routine is in full swing, and that’s great! But in addition to planning your new workout schedule and piecing together your 2024 vision board, make time to set out a strong financial strategy for the year, too. It’s one resolution that could pay dividends not just in 2024, but in all the years that follow, too.
There’s a lot to consider, but don’t let that deter you to help you get started. Here are ten key planning topics to consider adding to your plan.
1) Boosting Your Retirement Contributions
Workplace accounts. Are you maximizing contributions to your workplace plan? If not, now’s the time to think about increasing your contribution to take full advantage of any employer match benefit. For 2024, the maximum employee deferral for 401(k), 403(b), and 457 accounts is $23,000, and individuals ages 50 and older can defer an additional catch-up of $7,500. For SIMPLE IRAs, the maximum deferral is $16,000 and the catch-up is $3,500.
Traditional IRA. Maxing out your contributions to a traditional IRA is another option. The original SECURE Act repealed the maximum age for contributions, so individuals ages 70 and a half and older who earn income in 2024, can contribute to a traditional IRA. Modified adjusted gross income (MAGI) limits for contributions to traditional and Roth IRAs increased in 2024, so be sure to review MAGI eligibility thresholds. The maximum contribution amount to a traditional or Roth IRA in 2024 is $7,000, with a $1,000 catch-up for clients ages 50 and older.
New Roth IRA options. Under the recently enacted SECURE 2.0 act, eligible taxpayers will have the ability to contribute to SIMPLE Roth accounts and SEP Roth IRAs.
More changes to come in 2024. You may hear about additional changes to retirement accounts pursuant to SECURE 2.0, such as the indexing of IRA catch-up contributions to inflation, which begins in 2024. We’d be happy to discuss these future changes with you and what they mean for your planning.
2) Maximizing HSA Contributions
If you have a high deductible health plan (HDHP), now is a good time to explore how you can maximize your health savings account (HSA) contributions this year. In 2024, the maximum contribution for an individual HSA is $4,150, and the maximum for a family HDHP is $8,300. If you're age 55 or older, you can contribute an additional $1,000. Working weekly or monthly HSA contributions into your budget in a way that will achieve those maximum amounts will lower your tax liability and provide more funds for healthcare to help keep you feeling and living well.
3) Managing Your Marginal and Capital Gains Tax Matters
If you’re on the threshold of a tax bracket, you may be able to put yourself in the lower one by planning to defer some income to 2025. Here are a few thresholds to keep in mind as the year progresses:
- 37 percent marginal tax rate: Taxable incomes exceeding $609,351 (individual), $731,201 (married filing jointly), $609,351 (head of household), and $365,601 (married filing separately)
- 20 percent capital gains tax rate: Taxable incomes exceeding $518,901 (individual), $583,751 (married filing jointly), $551,351 (head of household), and $291,851 (married filing separately)
- 3.8 percent surtax on investment income: The lesser of net investment income or the excess of MAGI greater than $200,000 (individual), $250,000 (married filing jointly), $200,000 (head of household), and $125,000 (married filing separately)
- 0.9 percent additional Medicare tax: W-2 earnings and self-employment income above the same MAGI thresholds as the investment income surtax (For clients with W-2 earnings above the MAGI thresholds, total Medicare taxes will be 2.35 percent; for self-employed clients, total Medicare taxes will be 3.8 percent.)
4) Rebalancing Your Investment Portfolio
Reviewing your capital gains and losses may reveal tax planning opportunities, such as harvesting losses to offset capital gains which would mean potentially paying less in taxes.
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5) Making Your Charitable Giving Pay Off
If you’re older than 70 and a half, you can make a qualified charitable distribution (QCD) of up to $105,000 directly to a charity; if you’re married and filing jointly, you may exclude up to $105,000 donated from each of your and your spouse’s IRA. Under SECURE 2.0, taxpayers may begin to take advantage of a one-time opportunity to use a QCD to transfer up to $50,000 to a charitable remainder trust, charitable annuity trust, or a charitable gift annuity.
6) Forming a Plan for Stock Options
If you hold stock options, it’s a good idea to develop a strategy for managing your current and future income while considering a potential concentration of the stock across your entire book of business. As part of this, be sure to have your tax advisor prepare an alternative minimum tax (AMT) projection. Keep in mind, AMT exemption limits increased in 2024 to $85,700 for single tax filers and $133,300 for married joint filers.
7) Adjusting Your Withholding Amount
If you think you may be subject to an estimated tax penalty, consider asking your employers (via Form W-4) to adjust your withholding to cover shortfalls. The IRS tax withholding calculator can help you with your estimates.
8) Assessing Your Estate Plans
Year-end is always a good time to review and update your estate plan to make sure it’s still in line with your goals and accounts for any change in circumstances. Depending on your net worth, establishing a defective grantor trust, spousal lifetime access trust, or irrevocable life insurance trust may be an effective strategy to reduce your estate tax exposure. In addition, take the time to update your beneficiary designations and review trustee appointments, power of attorney provisions, and health care directives.
9) Adding Key Financial Dates to Your Calendar, And Keeping On Top of Your Finances Each Month
Creating a financial strategy for the year isn’t much use if you don’t stick to it and stay on top of it. Be sure to check out the Monthly Financial Checklist and Key Planning Dates on our website at whzwealth.com/resources to help with your planning now, and to help you stay on track later.
10) Invest In Professional Help From a Trusted Partner
This checklist is a great starting point to set you up for healthier finances in the months and years ahead. But as I noted at the outset, there are many other things to consider and it can get complicated, especially if you have a high income and/or a fair amount of investments already.
That’s why the tenth and final thing to consider is reaching out for professional help as you plan your financial strategy to best build and manage your wealth. In terms of your financial health, it’s as important a relationship as the one you have with your primary care provider to keep your physical health as great as it can be.
So please feel free to contact us for a complimentary consultation to see how our Plan Well. Invest Well. Live Well.™ process can guide you in creating a financial plan and wealth management strategy that’s optimized just for you. You can call us at (860) 928-2341 or book a consultation on our website.
Presented by Senior Vice President, Financial Advisor Leisl L. Langevin CFP®, CDFA®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084, 860.928.2341. http://www.whzwealth.com These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.
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