Five Money Must-Do’s for a Prosperous 2024

Welcome to a new year filled with endless possibilities and, of course, fresh financial goals! As we dive into 2024, let's ensure your financial landscape is not only well-tended but thriving. One of the first things I do in January is plan the contributions I will make to each of my investment accounts with new higher limits and maximize the retirement plans I have access to. Then I review beneficiaries, update important information, and take a look at my credit report to make sure it’s accurate and protected. Here are your January Money Must-Do's to kickstart a prosperous year:

1. Maximize Your Roth IRA Contributions:

Start the year strong by maximizing contributions to your Roth IRA accounts. The annual contribution limit has increased to $7,000 if you are under 50 years old and $8,000 for those age 50 and older. The amount and eligibility of your contribution depend on your household income. If you file taxes as a single person, your Modified Adjusted Gross Income (MAGI) must be less than $146,000 for tax year 2024 to make a full contribution and phases out eligibility above $161,000. MAGI must be less than $230,000 for those married filing jointly and phases out eligibility when income exceeds $240,000.

If you are above the income threshold, you may still benefit from making non-deductible IRA contributions. Implementing a conversion to a Roth IRA from non-deductible IRA contributions, commonly known as a “back-door” Roth IRA contribution, allows you to effectively pay taxes at today’s rate allowing all future growth to be tax-free when withdrawn in retirement. However, you would want to discuss this strategy with a financial planner and tax preparer before executing this tactic as other tax considerations come into play.

2. Increase 401(k) and HSA Contributions with New Limits:

Embrace the new year with higher limits! Boost your 401(k) and HSA contributions to align with the updated limits. 401(k) contribution limits increased to $23,000, and $30,500 if you are 50 years of age and older. Divide the contribution limit by your remaining pay periods to ensure you fill this tank to the max. It's a powerful way to supercharge your long-term savings.

Health Savings Accounts, or HSAs, increased the individual limit to $4,150 per year and $8,300 for a family. Those age 55 and older can make an additional $1,000 as a catch-up contribution. To contribute to an HSA, you must be enrolled in an HSA-eligible health insurance plan and not be enrolled in Medicare or be a dependent on another’s tax return.

HSAs are a unique account that has the most tax-advantaged features of any plan because it is triple tax-exempt. The contributions are tax-deductible, the growth is tax-deferred, and the future withdrawals are tax-free as long as they are used for qualified medical expenses. For these reasons, many will opt to invest their HSA to grow it like a retirement account since medical expenses are commonly expected to be much larger in our retirement years.

3. Review and Update Beneficiaries:

Secure your financial legacy by reviewing and updating beneficiaries across all your accounts. Ensure your money goes directly to those you intend by addressing checking, savings, investments, 401(k), old employer plans, and life insurance. Make an inventory of all of your accounts with the named beneficiaries that you can keep with important documents. When updating beneficiaries consider adding both a primary and contingent beneficiary in the percentages you desire. Naming a beneficiary will allow funds to go directly to those you intend and help avoid the cost and often time-consuming process of probate when your clock is up.

4. Communicate Important Information:

In the spirit of preparedness, notify your next of kin about the location of essential estate planning documents and the inventory of important accounts you outlined above. Also, be sure to outline bills that would need attention in case of an emergency and keep all of this information in a secure location. The more organized you can be with your financial life, the easier it will be for your Trustee, Power of Attorney, or Executor to step in to care for you, your family, and your household when it is needed most.

5. Guard Against Identity Fraud:

The Federal Trade Commission has made permanent free weekly access to credit reports with the three major credit reporting agencies: Equifax, Experian, and TransUnion. Kick off the year by reviewing your credit report at www.AnnualCreditReport.com. Ensure its accuracy, look for opportunities to improve your score, and protect yourself against identity fraud. Your report shows how many credit cards and loans you have, whether you pay your bills on time, and any debts that have been turned over to collections. Creditors, insurers, and some employers often use it do decide if they want to do business with you and the terms they will offer to you.

Errors can hurt your credit, increase the amount you would pay if you borrow and even derail your opportunities for loans, insurance, renting a home, or securing a job. They can also help spot identity theft. If you do find a mistake, you can report it to www.IdentityTheft.gov. A proactive approach to protecting your financial identity is always a smart move.

Feeling ready to conquer your financial goals in 2024? Declare your commitment to making this your best money year yet! It is time to turn financial dreams into reality and design your best life!