Maximizing Your Retirement Contributions Before Year-End: A Guide for Massachusetts and New Hampshire Residents
As the end of the year approaches, it’s crucial for Massachusetts and New Hampshire residents to review and maximize their retirement contributions. By optimizing your retirement savings before the year-end, you can enhance your financial security and reduce your taxable income. Here’s a strategic guide to help you make the most of your retirement contributions before the deadline.
1. Understand Contribution Limits
To effectively maximize your retirement contributions, familiarize yourself with the 2024 limits:
401(k) and 403(b) Plans: For 2024, the contribution limit is $23,000, with an additional $7,500 catch-up contribution for those aged 50 and older.
IRA Accounts: The contribution limit for Traditional and Roth IRAs is $7,000, with a $1,000 catch-up contribution for individuals aged 50 and older.
SEP IRAs: The limit is up to 25% of compensation or $66,000, whichever is less. Contributions must be made by the business tax filing deadline.
2. Max Out Employer-Sponsored Plans
If you participate in a 401(k) or 403(b) plan:
Review Your Contributions: Check your current contribution rate and adjust it if needed. Increasing your contributions before the year-end may help you reach the annual limit.
Catch-Up Contributions: If you’re 50 or older, ensure you’re taking full advantage of the catch-up contributions to potentially boost your retirement savings.
3. Optimize IRA Contributions
For Traditional and Roth IRAs:
Maximize Contributions: Contribute the full $7,000 (or $8,000 if you’re 50 or older) to your IRA accounts before December 31. Although IRA contributions can be made until the tax filing deadline (April 15), contributing before the year-end can provide immediate tax benefits.
Consider Roth vs. Traditional: Evaluate whether a Roth or Traditional IRA is more beneficial based on your current tax situation and future tax expectations. Traditional IRA contributions may be tax-deductible, while Roth IRA contributions offer tax-free withdrawals in retirement if you are eligible for Roth contributions based on income limits.
4. Make Use of Catch-Up Contributions
If you’re 50 or older:
Increase Contributions: Utilize the additional catch-up contributions allowed for both 401(k) and IRA accounts. This can significantly enhance your retirement savings.
5. Evaluate Your Investment Strategy
Rebalance Your Portfolio: Year-end can be a great time to review and rebalance your investment portfolio. Ensure it aligns with your retirement goals and risk tolerance.
Adjust Asset Allocation: Make adjustments to your asset allocation based on your retirement timeline and market conditions.
6. Utilize Employer Matching
Maximize Matching Contributions: Contribute enough to your employer-sponsored plan to receive the full match. This additional benefit can significantly boost your retirement savings.
7. Consider Your Tax Situation
Tax Benefits: Increasing your contributions can potentially reduce your taxable income. Contributions to Traditional retirement accounts may offer tax benefits for the current year.
Roth IRA Benefits: If you anticipate a higher tax rate in the future, Roth IRA contributions may be advantageous as they provide tax-free withdrawals in retirement.
8. Plan for Future Contributions
Set Up Automatic Increases: Set up automatic contribution increases for the new year to consistently maximize your retirement savings.
Review Limits Annually: Stay informed about annual contribution limits and adjust your savings plan accordingly.
9. Consult a Financial Advisor
Seek Professional Advice: A financial advisor can help you develop a tailored strategy to maximize your contributions and optimize your retirement plan. They can provide guidance specific to Massachusetts and New Hampshire tax laws and financial conditions.
Conclusion
Maximizing your retirement contributions before the year-end is a vital step to possibly ensure a secure financial future. For residents of Massachusetts and New Hampshire, this means understanding contribution limits, optimizing employer-sponsored plans and IRAs, and leveraging tax benefits. For personalized advice and strategies tailored to your financial situation, reach out to a financial advisor. Act now to potentially enhance your retirement savings and achieve your long-term financial goals.
Disclosures: Past performance is not indicative of future results. This material is for informational use only and should not be considered investment advice. Investing involves risk. Principal loss is possible. The opinions expressed are those of Guardian Wealth Advisors, LLC. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Investment advisory services offered though Guardian Wealth Advisors, LLC D/B/A Finance Roadmap Planning. Guardian Wealth Advisors, LLC (“GWA”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about GWA’s investment advisory services can be found in its Form ADV Part 2 or Form CRS, which is available upon request. GWA-24-64
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