The latest on the blog:
2025 Annual Limits
As we enter 2025, it is prudent to update funding amounts for various account types to reflect new contribution limits. Below we will overview annual limits for notable financial planning items. Retirement Accounts Account Type Limit Catch-Up IRA $7,000 $1,000 if over 50 Roth IRA $7,000 $1,000 if over 50 401(k) Deferral (Pre-tax or Roth) $23,500 $7,500 if over 50 401(k) Additions (415 Limit) $70,000 $7,500 if over 50 SEP IRA $70,000 SIMPLE IRA $16,500 $3,500 if over 50 Health Savings Accounts Account Type Limit Catch-Up HSA (Single) $4,150 $1,000 if over 55 HSA (Family) $8,30 $1,000 if over 55 FSA $3,050 Estate and Gift Tax Annual Gift Tax Exclusion $18,000 Estate and Gift Tax Basic Exclusion $13,610,000 per Person Maximum Estate Tax Rate 40% Account types may have limits based on your specific situation and it is always important to discuss them with your CPA or a financial professional. If you’d like to have an introductory call to discuss your situation with our team click here to schedule a call. If you’d like to sign-up for our monthly newsletter with four high-quality, financial planning focused posts per month, click here
Smart Moves to Make during a Market Downturn
During a market downturn it is our natural tendency to want to make changes to our investment strategy despite a plethora of research that points to the optimal course of action being no action at all. When we log-in and see red on the screen, our fight or flight response kicks in and while that response served our ancestors well when a lion emerged on the savannah, it does us no favors in investing. While changing your investment strategy will likely do more harm than good, you can still make smart financial planning decisions to make the most of a change in market conditions. Below we will outline several planning strategies that can be implemented during a period of market stress. Rebalance Portfolio The simplest action that you can take is to rebalance your portfolio to its target allocation. During periods of market stress, your investments can become disconnected from their target weighting – often the equity investments falling below target and the fixed income and cash components rising above target. When you rebalance your portfolio, you will sell from the assets that are above target and use the proceeds to buy investments that have fallen below target allowing you
What will my $7,000 Roth IRA Contribution be Worth in the Future?
In 2024, the Roth IRA contribution limit is $7,000. For those over the age of 50, there is an additional $1,000 catch-up contribution allowed bringing the total to $8,000. The incredible tax benefit of a Roth IRA is that in exchange for foregoing a tax deduction on your contribution the account becomes tax free as long as the holding and age requirements are met. This means that given the power of time and compounding your $7,000 contribution can grow to become a substantial sum of tax free money in the future. How much could your $7,000 contribution be worth over time? Years Value 5 $11,273 10 $18,156 20 $47,092 30 $122,145 40 $316,814 42 $383,345 A 22 year old college graduate who makes the commitment to max out their Roth IRA the year they graduate would see just that years contribution grow to over $383 thousand dollars by the time they reach 65. Once you have built the habit of saving and investing it is much easier to continue doing so. What would the future value of funding your Roth IRA every year until retirement be worth? Years of Maxing Roth IRA Value 5 $42,735 10 $111,561 20 $400,925 30
