The end of the year is the perfect time to take a step back and review your entire financial health. Starting today, we’ll be sharing seven simple items you can cross off your list in the last few weeks of 2017.
Tip 1: Review Your Retirement Contributions
In 2018, the maximum contribution limit for 401(k) plans will rise to $18,500, while the limit for traditional and Roth IRAs remains at $5,500. If you’re 50 or older, remember that you’re eligible to make catch-up contributions of $6,000 to your 401(k) plan, and of $1,000 to your traditional or Roth IRAs.
If you’re not maximizing your contributions to reach these limits, take a look at your budget. Do you expect to receive a bonus or a raise this year? If so, put those funds toward your contributions. If you’re making Roth contributions to your 401(k) plan, it’s also a good time to regroup with your accountant and financial advisor to evaluate whether that’s still the most optimal strategy for your situation.
If you’re self-employed, you may consider establishing and contributing to a SEP IRA or a Solo 401(k) plan to help boost your retirement savings. These contributions can also decrease your taxable income in the tax year attributable to the contribution.
If you opt for the latter, remember that Solo 401(k) plans must be established by December 31, 2017. You can make contributions to either of these retirement vehicles until the extended due date of your tax return.
Need our help working through your year-end planning checklist? Find an advisor near you.