January “TO DO” List from LFS
Happy New Year again! As we begin 2023, we have our usual list of things for us to do together. The good news for you is that not all of these action items will apply to you!
First of all, RMDs: As usual, your required minimum distribution (RMD) is based on the year-end balance in your traditional or beneficiary IRA’s. Because the market was less than stellar in 2022, your 2023 RMD is likely less than your 2022 requirement. Your RMDs can be fulfilled in any combination of cash, shares transferred to an after-tax cash account or a tax-advantaged charitable contribution. We will help you get this done, either as one distribution or as periodic withdrawals. Your federal and state taxes are usually withheld. Traditional Roth IRAs have no RMD requirements while Beneficiary Roth’s do, although no taxes are due. The age at which RMDs must be initiated has increased but as always, there are rules around this change. If this change impacts you, we will tell you and help you figure out what to do.
Secondly, contribution limits for all types of retirement accounts have been increased for 2023:
401K or 403B: Employee contribution is being increased from $20,500 to $22,500. If you are over 50, your contribution has increased from $27,000 to $30,000. You need to make this change directly with your plan administrator, but we can help you figure out how to adjust your monthly contribution. As always, this contribution can be in any combination of Roth 401K/403B and traditional 401K/403B if your plan offers both. There are no income limits for a Roth 401K.
Traditional or Roth IRA’s contribution limit is being increased from $6,000 to $6,500. If you are over 50, your contribution is being increased from $7,000 to $7,500.
Roth IRA’s: Earned income eligibility has been increased:
Modified Adjusted Gross Income (MAGI) for full contribution increased from$129,000 to $138,000 for single taxpayers
Modified Adjusted Gross Income (MAGI) for full contribution increased from$204,000 to $218,000 for married, filing jointly taxpayers
There are partial contributions allowed above these limits. Call us for details.
SEP or SIMPLE IRA’s: Call us
You can still make 2022 IRA contributions until April 17, 2023. Special paperwork is required to ensure the contribution is applied to the correct year. Call us.
Next, if you have your cash reserve fully funded (in a high yield savings account please) and have extra coins under your sofa cushions, you can now buy another I Bond for $10,000. The annual interest rate is 6.89% for the first six months for any I Bonds issued by May 30. At that time, the rate will be adjusted again. We can help you purchase I Bonds whether or not you bought one in 2022. Lots of rules here just like last time. Call us.
This is enough for now. We are here to help so feel free to call, text or email. Or drop by!