The SECURE Act 2.0, handed in December 2022, builds upon its 2019 predecessor – the SECURE Act – with changes impacting Required Minimal Distributions (RMDs), retirement contributions and catch-ups, 529 plans, and extra. Efficient 2023, the RMD age will increase and RMDs will start at age 73 as a substitute of 72. Which means in the event you flip 72 in 2023 you would not have to take an RMD this yr. Focus on the timing and tax implications of your RMDs together with your CPA to make sure tax estimates are adequate and acceptable. RMDs have to be distributed by December 31, 2023 (until it’s your first yr for an RMD, throughout which you’ll delay till April 1, 2024, however could be required to take two in a single yr). As much as $100,000 of your RMD may be gifted on to a professional charity, which can also be a method to cut back earnings.
Discover Roth Conversions (changing your IRA to a Roth IRA) in lower-income years, if doable. Extra data on Roth conversions may be discovered right here. Focus on tax implications together with your CPA.
Maximize annual contributions to retirement plans, if doable and relevant (limits listed beneath).
RETIREMENT PLAN CONTRIBUTION LIMITS AND DEADLINES FOR 2023
| 401(okay), Roth 401(okay), 403(b), and 457 Plans |
Max contributions of $22,500 (in addition to further $7,500 catch-up for these 50+) have to be made by December 31, 2023 |
| IRAs |
Most contribution of $6,500 (in addition to further $1,000 catch-up for these 50+) have to be made by April 15, 2024 |
| Roth IRA |
Most after-tax contributions of $6,500 (in addition to further $1,000 catch-up for these 50+) have to be made by April 15, 2024 |
| SEP IRA/ Solo 401(okay) |
Most contributions (lesser of $66,000 or 25% compensation) may be made till the tax submitting date (together with the prolonged submitting date) |
| SIMPLE IRA |
Most contributions of $15,500 (in addition to further $3,500 catch-up for these 50+) have to be made by December 31, 2023 |
HEALTHCARE AND MEDICARE OPEN ENROLLMENT
In contrast to HSA funds, funds in your FSA usually don’t roll over from yr to yr (primarily based on an employer plan, you could possibly elect to roll over $610, or you’ll be able to elect a “grace interval” to make use of funds). The deadline to make use of these funds is December 31, 2023. When you elect to make use of the grace interval the deadline is March 15, 2024.
- Annual HSA contribution restrict elevated from $7,300 to $7,750 for household plans ($3,850 for single)
- Annual FSA contribution restrict elevated from $2,850 to $3,050
Well being Financial savings Accounts (HSAs) may be funded by means of April 15, 2024 for the 2023 yr. Maxing out contributions in these tax-efficient accounts is usually a good suggestion.
Medicare open enrollment runs from October 15 to December 7. Earlier than and throughout the open enrollment interval, we imagine it’s all the time a good suggestion to take a recent have a look at your employer’s protection choices and enroll if wanted. See our article right here.
ANNUAL GIFT EXCLUSION
The annual present tax exclusion for 2023 is $17,000 ($34,000 for a married couple), a rise of $1,000 from the prior yr. Bear in mind: there is no such thing as a restrict on how a lot you’ll be able to present in whole per yr; nevertheless, there’s a restrict on how a lot you’ll be able to present to any single particular person per yr with out triggering a present tax. Presents have to be accomplished by year-end to qualify for this yr’s exclusion.
CHARITABLE GIFTING
Given the usual deduction quantities, combining (often known as charitable bunching) two or three years’ value of charitable contributions into one tax yr utilizing a Donor Suggested Fund (DAF) could also be helpful. If you’re on the cusp of being over the usual deduction, you would possibly contemplate accelerating your items for future years.
One other option to keep away from realizing capital positive factors taxes is to present appreciated belongings held greater than a yr to charity. In lots of instances, this can be extra tax-efficient than gifting money. Gifting appreciated belongings at the side of a donor-advised fund could also be a helpful technique for a lot of households.
Certified Charitable Distributions (QCDs) of as much as $100,000 may be comprised of IRAs on to charities for people who’re 70.5 or older. Focus on together with your advisor and CPA if this is perhaps choice for you.
Evaluation your tax return for any charitable contribution carryover. Carryover contributions have to be utilized inside 5 years of the charitable present, at which level the carryover is misplaced.
IMPORTANT CUSTODIAN/ ASSET TRANSFER INFORMATION
| Inventory/ money items on to charities |
Will need to have signed switch memo to SignatureFD by December 15, 2023 |
| Mutual Fund transfers |
Will need to have signed switch memo to SignatureFD by October 30, 2023 |
| Inventory/Money items made to a Donor Suggested Fund (DAF), then granted out to charitable organizations |
Will need to have signed switch memo to SignatureFD by October 30, 2023 |
| Inventory/Money items between accounts on the similar Custodian |
Will need to have signed switch memo to SignatureFD by December 15, 2023 |
Be aware: The above are advised deadlines from our Custodians, because it permits for time with paperwork processing. Nonetheless, some transfers could also be expedited by logging into your Custodian web site and requesting them there. SignatureFD can assist you navigate your choices primarily based on the required timeframe.
SAVING FOR EDUCATION (529 PLANS)
A particular provision lets you speed up your annual items and use as much as 5 years of your annual present exclusion in a single yr ($85,000 per individual or $170,000 per couple). With this technique, you should file a present tax return and ensure to not contribute once more inside these 5 years.
Starting in 2018, some states began permitting distributions from a 529 Plan of as much as $10,000 per yr for major and secondary training. Beforehand, distributions might solely be used for “certified increased training bills.” Make sure you confirm together with your state plan supplier.
The SECURE Act permits 529 Plan beneficiaries to make use of as much as $10,000 (lifetime restrict) in the direction of pupil mortgage debt for themselves or a sibling.
OTHER PLANNING CONSIDERATIONS
Well being Insurance coverage Deductible: You probably have met your medical health insurance plan deductible, contemplate incurring any further medical bills previous to year-end, at which level your deductible will reset.
Different Insurance coverage-Associated Reminders: You probably have had any modifications in tackle or financial institution establishment, notify insurance coverage carriers of the change in order that premium notices are acquired and auto funds proceed to keep away from a lapse in protection. Moreover, keep in mind to evaluation beneficiary designations within the occasion of a change in your loved ones state of affairs, such because the beginning of a kid, loss of life, or divorce. Lastly, keep in mind to offer CPAs with owners premiums for rental properties.
Excessive Property Exemption Surroundings Planning Techniques: With the property exemption at $12.92 million per individual, now could also be time to consider wealth switch planning. The present property exemption will sundown again to ~$6 million per individual in 2026. We frequently look ahead to doable modifications to those tax and property legal guidelines that will influence these methods, so discuss together with your property legal professional, CPA, and advisor to see which techniques ought to be thought-about to your state of affairs.
Discover Certified Enterprise Earnings (QBI) Deduction: The enterprise proprietor deduction (Part 199A handed with TCJA) for passthrough earnings aside from particular service companies (i.e., accountants, consultants, medical doctors, and so on.).
In abstract, there are a number of planning techniques to think about as we strategy the top of the yr that may be accomplished now. The monetary advisors at SignatureFD proceed to watch potential legal guidelines or modifications associated to current tax laws as the rest of the yr progresses. We’ll ship shoppers any additions to those suggestions as they current themselves. Please attain out to your advisor with any questions particular to your circumstances.
