As a new year begins, it’s time to revisit your financial plans and ensure you’re making the most of available opportunities. Here are key financial data to consider and important items we are looking at for clients as 2025 begins.
Maximizing Contributions
- Retirement Accounts: Confirm you’ve reached the maximum allowable contributions for your 401(k) and HSA. For 2024, the limits for 401(k) contributions are $23,000, with an additional $7,500 catch-up for those over 50.
- 529 College Savings Plans: Make any last-minute contributions to maximize tax advantages for education savings.
- Flexible Spending Accounts (FSA) and Dependent Care Accounts: Use any remaining funds before the “use it or lose it” deadline.
- Solo 401(k): If you’re self-employed, consider this option for additional tax savings and enhanced retirement contributions, up to $69,000 in 2024.
Business Owners’ Financial Checklist
- Review Financial Statements: Assess your company’s financial health and identify areas for improvement or tax savings.
- Utilize Tax Savings: Take advantage of deductions such as equipment purchases, retirement plan contributions, or deferring income for tax-efficient strategies.
Tax Law Changes for 2024
- Inflation Updates: Tax brackets and standard deductions have been adjusted for inflation. Make sure to use the latest numbers when reviewing your tax liability.
- Energy Efficiency Credits: Leverage available tax credits for clean energy improvements:
- Residential Clean Energy Credit remains at 30%.
- Energy Efficient Home Improvement Credit offers up to $1,200 annually for eligible improvements.
- Clean Vehicle Credit provides incentives for purchasing qualifying electric vehicles.
Portfolio Review and Investment Strategies
- Rebalance Your Portfolio: Align your investments with your goals and risk tolerance, accounting for anticipated market conditions in 2025.
- Explore Tax Strategies: Utilize tax-loss harvesting and gifting appreciated stock to help optimize tax outcomes.
- Assess Your Fixed Income Strategy: As the Fed makes interest rate changes, the yields on bonds and money market funds change so assess the current environment for proper quality and duration.
Retirement Planning Updates
- RMD Age Adjustment: Required minimum distributions (RMDs) now begin at age 73. Plan withdrawals carefully to avoid unnecessary taxes.
- Catch-Up Contributions: Maximize these higher contribution limits if you’re over 50, particularly in 401(k) or IRA accounts.
Final Thoughts
Reviewing your financial plan at the start of a new year can help ensure that you’re making the most of available opportunities. Whether it’s maximizing contributions, leveraging tax savings, or optimizing your portfolio, careful planning now and consideration of the key financial data can set you up for success in 2025.
If you have any questions or need assistance, reach out to a Wealth Dimensions advisor today. We’re here to help you end the year strong and prepare for a brighter financial future.
For informational purposes only. Not intended as investment advice or a recommendation of any particular security or strategy. Information prepared from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. For more information about Wealth Dimensions, including our Form ADV Part 2A Brochure, please visit https://adviserinfo.sec.gov or contact us at 513-554-6000. Please be advised that this material is not intended as legal or tax advice. Accordingly, any tax information provided in this material is not intended and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.