January is Financial Wellness Month!
The start of a new year is the perfect time to take control of your finances and set the stage for success. To help you kick off 2024 on the right foot, we’ve compiled key tips and updates that can make a meaningful impact on your financial well-being this year.
Here is some practical advice, actionable steps, and insights to help you achieve your financial goals!
1. Take Note of the 401(k) Automatic Enrollment Under SECURE 2.0:
Starting in 2025, SECURE 2.0 mandates automatic enrollment in 401(k) and 403(b) plans, with some exceptions for small businesses. This aims to increase participation, which benefits employees and employers through tax advantages and enhanced employee retention. Eligible participants will be automatically enrolled but can choose to opt out.
2. Plan for Higher Retirement Account Catch-Up Contributions:
Individuals aged 50 and older can make catch-up contributions to their retirement plans within specified limits. Starting this year, SECURE 2.0 significantly raises these limits for those aged 60 to 63, allowing contributions of either $10,000 or 50% more than the standard catch-up amount, whichever is greater.
3. Prepare for Potential Tax Changes in 2026:
Some experts are calling 2025 the “Super Bowl of tax law changes,” with the Tax Cuts and Jobs Act set to expire on December 31, 2025. This includes the reduction of individual income tax rates, increased standard deductions, the doubling of the child tax credit, and limits on various deductions like state and local taxes and mortgage interest. The alternative minimum tax will apply to more people after 2025 as exemptions revert to pre-TCJA levels, while the 20% pass-through deduction and increased estate tax exemption will expire. Additionally, international tax provisions like GILTI, FDII, and BEAT will become more restrictive.
4. Enhance Your Health Savings:
With health care costs rising, don’t overlook the advantages of a Health Savings Account (HSA). The 2025 annual HSA contribution limit is $4,300 for individuals with high-deductible health coverage (up from $4,150 in 2024) and $8,550 for family coverage (up from $8,300 in 2024).
5. Leverage New Tech Tools:
Start the year by exploring the latest financial tech tools designed to help you manage your money more effectively. Whether it’s a new budgeting app or an artificial intelligence (AI)-powered investment tool, these technologies can provide personalized advice and keep you on track throughout the year.
Want to achieve your own financial wellness? Reach out to us today and we can get your scheduled for a 15-minute consultation.