2023 Year-End Financial Planning Moves to Consider

As you prepare to say “goodbye” to 2023 and “hello” to 2024, here are a few smart financial planning moves to consider:

1. Make 2023 Contributions to IRAs (Individual Retirement Accounts)  
When? Before you file your taxes. 
 
If it’s part of your financial plan, consider “maxing out” your IRA by 12/31. This means contributing the maximum allowable contribution: $6,500 if under age 50, and $7,500 if age 50 or above. If you don’t have the cash flow to contribute by 12/31, don’t worry! Just make sure you do so before you file your taxes next year. 

2. Make 2023 Contributions to HSAs (Health Savings Accounts)  
When? Before 12/31. 
 
If it’s part of your financial plan, consider “maxing out” your HSA by 12/31. This means contributing the maximum allowable contribution: $3,850 for individual coverage or $7,750 for family coverage. Be sure to include any HSA contributions made by your employer when calculating your eligible contribution amount. If you are not contributing to your HSA via payroll deductions, you have until you file your taxes to make the contribution.

3. Make 2023 Contributions to 529 Education Accounts
When? Before 12/31. 
 
For clients living in and contributing to 529s in states with a state income tax deduction for contributions (like Ohio), be sure to contribute to those plans before 12/31 to claim this year’s deduction. 

4. Perform Conversions from Traditional IRA to Roth IRA  
When? Before 12/31. 
 
For those that are planning to do the Backdoor Roth strategy, make the conversion from Traditional to Roth IRA by 12/31 in order to take any applicable tax in the current year. As a Commas client, your advisor will perform the Backdoor Roth Conversion for you on accounts that we manage! 

5. Take your Required Minimum Distributions from Retirement Accounts 
When? Before 12/31. 
 
If you own a Traditional IRA or 401(k) and you have reached the age of 73, you must take your Required Minimum Distribution by 12/31. If you forget to take the distribution by the deadline, you may be subject to a 50% penalty on the shortfall.

If you inherited a Traditional IRA after 2019, you are not required to make distributions from the account for the 2023 tax year; however, you can still make voluntary distributions and might be better off doing so. Taking voluntary distributions could help reduce the tax spike that would potentially occur in the year you are forced to empty the account (10 years after the death of the original IRA owner).

As a Commas client, your advisor will make sure that you’ve taken distributions from the necessary accounts that we manage!

6. Donate to Charity  
When? Before 12/31. 
 
Donating to charity is an incredible way to support your community. It could also be a smart way to avoid capital gains taxes. Additionally, if you itemize your taxes instead of taking the standard deduction, charitable donations could enable you to deduct even more! 

7. Review Your Estate Plan 
When? Once annually. 
 
If you already have estate documents in place, review your documents to confirm that they are still up to date and consistent with your current wishes.

If you do not have estate documents in place, contact your advisor to learn more about your options.

Check your beneficiaries on your accounts at least annually. A beneficiary will receive the funds in your account if you pass away. To check your beneficiaries on accounts that Commas manages, log into Betterment, navigate to Settings, and click Accounts. 

8. Line Up a Tax Specialist for Filing your Taxes 
When? By January. 
 
Consider working with a tax professional, such as a CPA or EA, for your tax preparation. Not only will working with a tax professional make sure your taxes are filed accurately and on time, but it will save you time and reduce stress. If you’re interested in working with a tax professional and want a referral, please reach out to your advisor.

9. Planning for 2024! 
When? Before 12/31. 

Annual contribution limits are increasing in 2024 for various financial accounts:

• Reach out to your advisor with any questions you have during your employer’s open enrollment period.
• Contributions for many employer-sponsored retirement plans (like 401(k) and 403(b)) are increasing from $22,500 to $23,000 per year. Catch-up contributions will remain $7,500 per year.
• HSA contributions are increasing from $3,850 to $4,150 for individual coverage and from $7,750 to $8,300 for family coverage.
• IRA contributions are increasing from $6,500 to $7,000 per year. Catch-up contributions for those over the age of 50 are still $1,000 per year.

Commas is a wholly-owned subsidiary of Truepoint Inc., a fee-only Registered Investment Adviser (RIA). Registration as an adviser does not connote a specific level of skill or training. More detail, including forms ADV Part 2A and Form CRS filed with the SEC, can be found at www.usecommas.com. Neither the information, nor any opinion expressed, is to be construed as personalized investment, tax or legal advice.