It’s too early in the year to feel defeated! Once taxes are out of your hair, consider addressing these six items as we head into Q2. Here is your 2023 checklist:
High Yield Savings Account
- What’s the interest rate in your checking/savings account? Unfortunately, traditional brick & mortar banks typically aren’t competitive in this space.
- Open up a high-yield savings account that pays 4%+ annual interest as of the date of this blog.
- Generally, these accounts have no minimums or lock-ups and are very easy to use.
Health Savings Account (HSA)
- We can’t stress the benefits of this investment vehicle enough. Depending on your employer-provided benefits, an HSA may be reason enough for switching to a high-deductible health care plan.
- Contributions are tax-deductible, earnings grow tax-deferred, and withdrawals are tax-free if used for eligible medical expenses.
- Consider investing the balance of your HSA (and fund medical expenses from cash flow) to take advantage of tax-free growth!
Fund your IRAs
- You have until you file your 2022 taxes (no extension) to fund your 2022 IRAs (Traditional or Roth).
- Contribution limits are $6,000 (+ $1,000 catch-up if you are 50+)
- SEP IRAs allow for tax filing extensions.
- Contribution limits are dependent upon income but cannot exceed $61,000.
Roth IRAs for Minors
- Do you own your own business? Are your kids old enough to assist?
- Consider establishing a Minor Roth IRA and fund the account with their earnings.
- There are nuances to consider (i.e., reasonable tasks, wages commensurate with age); it’s worth discussing with your CPA.
Max your Roth 401(k)
- Find out if your employer offers one! The maximum contribution for 2023 is $22,500 (+ $7,500 catch-up contribution if you are 50+).
- Remember that shifting contributions to the Roth bucket will reduce your monthly paycheck as the funds go in after-tax vs. pre-tax.
Accreditor Investor Status
- The world of alternative investments is opening up for those meeting the definition of an Accredited Investor. However, just because you meet the criteria doesn’t mean an alternative investment is appropriate for you.
- The SEC definition is here. While the “professional” criteria are generally limited to those in the industry, you may meet the “financial” standards:
- Net worth over $1M (excluding your primary residence)
- Income over $200K (individually) or $300K (with spouse or partner) in the prior two years and reasonably expects the same for the current year.
There is a lot to consider when planning, so instead of focusing on everything, try picking a few items to tackle and remember small changes can make a big difference over time!
Ready to have a conversation? Contact us today.
All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services.