NEWSLETTER: End of Year Tax Readiness
- WD Wealth
- Nov 22, 2023
- 4 min read
Updated: Nov 24, 2023
Newsletter
November 22, 2023
Hi everyone. With Thanksgiving this week, we have lots to be thankful for here at WD Wealth. Welcome to our inaugural newsletter where we’ll bring you updates from the financial world as well as our take on tax law changes, deadlines, and updates that matter to you. This week’s newsletter: End of Year Tax Readiness. Gather ‘round our table for some quick tax treats.
TAX LAWS: WHAT YOU NEED TO KNOW
SECURE 2.0 Act was passed on December 29, 2022 by the Biden administration. This affects every single person who has a retirement plan and many of these changes come into effect in the new year. Let’s review the changes:
Automatic Enrollment
Most companies are now required to automatically enroll their employees into their retirement plan
RMDs
Penalties for not taking RMDs have decreased from 50% to 25% and in some cases down to 10%.
Age for taking RMDs increased from 72 to 73 in 2023 and will increase to 75 in 2033.
For 2024, RMDs for Roth 401ks are no longer required.
Catch-up Contributions
Participants age 50+ can contribute an additional $7,500 to their 401k accounts each year.
This amount will increase to $10,000 per year starting in 2025 for participants aged 60-63.
Long-Term Part-Time Eligibility
The original SECURE Act required that long-term part-time employees (500 to 999 hours of work), needed 3 consecutive years of service to be eligible. With SECURE 2.0, starting in 2025, eligibility decreases to 2 consecutive years of service.
Saver’s Match
In 2027, those who earn up to $71,000 per year will be eligible for a federal match of $2,000 per year.
The match phases out based on income and tax filing status and replaces the current Saver’s credit.
Student Loan Matching
Starting in 2024, student loan payments will be eligible as matching contributions in a workplace retirement account, counting towards retirement account contributions.
Matching contributions for student loan payments need to adhere to the same vesting schedule as other matching contributions. Eligibility for matching contributions is a prerequisite.
END OF YEAR TAX PLANNING
Just as your windshield gives you a much larger, forward-looking perspective than your rearview mirror gives you, tax planning done before the end of the year is usually far more effective. By the time most of our clients meet with their CPAs in March and April, they are reactively, not proactively, planning and the best opportunities are no longer available. Here are some last minute tax strategies you need to implement before the end of the year:
Set W-2 wages for 401(k) contributions
Loss Harvesting on your traditional investments
Niche strategies like our Solar Tax Shield (this is one of the most powerful strategies of tax year 2023, but spaces are limited and it’s first come-first serve so if you’re interested, reach out to us as soon as possible)
Elective Deferral (straight roth or pre-tax contributions)
Prepay expenses
Purchase bonus depreciable assets
Roth conversions
DON’T FORGET
401(k) contribution deadlines are coming up on December 31. Check out our next newsletter for details. We’ll explain the different types of contributions, what actions to take, how those different contribution types can be beneficial for your unique situation, and important dates to remember.
ANNOUNCEMENTS
Many of you have asked, “What happened to the alternative investment webinars?” We’ve gotten some great feedback from our clients and are happy to announce that we will relaunch this series. Join us as our sponsors discuss their available funds with live Q&A so you can get all your questions answered in real-time. What’s brand new, though (and it came from our viewers!), is that we will be adding a session after the presentation to discuss our thoughts and have an open discussion with attendees. Be on the lookout for an invite in the coming weeks and we’ll be sure to remind you in each newsletter.
SPOTLIGHT
Jason Kemper, Paraplanner at WD Wealth
“WD Wealth has just been phenomenal. The culture of support, growth, hard work, and integrity aligns with my own values.” Jason Kemper is one of our Paraplanners here at WD Wealth. Until taking the position in Denver, Jason grew up and lived in Dublin, Ohio, a small town outside Columbus. He pursued a Bachelor's degree with a major in Finance and an emphasis in Financial Planning. What he does at WD Wealth pairs well with his interests and education. Jason notes of the paraplanner role: “I would say that paraplanners are quarterbacking the finance side of the business. We orchestrate plan implementation, do the grunt work, then pass the ball to the Wealth Strategist who then engages with the client.”
WHAT HE'S WATCHING
I’ve been watching “The Money Guy Show.” It’s a financial planning podcast where they go over finance basics and practical tips. It’s conversational and entertaining.
WHAT HE'S READING
Right now Jason is reading Robert Kiyosaki’s Rich Dad. Poor Dad. Jason says it’s his first book on this topic, “I'm about halfway through it right now. I think it gives a lot of good advice, such as not necessarily being afraid of debt all the time. Also, just kind of reinforcing good behaviors so that you become as successful as you can be.”
TAKE A BREAK
We don’t have to be serious all the time.
Which of these financial crimes is not true? (Don’t Google it!)
In a bizarre attempt to evade security cameras, a thief covered his face in lemon juice, thinking it would make him invisible during attempts to rob a bank. He was, in fact, not invisible, and was captured on video, squinting at the camera.
A con artist went door to door peddling fake investment magazines. As people handed over their money, he took it and ran. Police didn't have to look hard to find the culprit because his full name and face were on the cover of the magazine.
A Wal-Mart customer attempted to buy a vacuum cleaner and microwave for $476 using a million-dollar Monopoly note. When he demanded change of $999,524, the police were called, resulting in his arrest.
Submit your answers to info@wdwealth.com. We’ll let you know if you got it right and we’ll reveal the answer in the next newsletter.
Want to chat? Click here to schedule an appointment
See you next time!
