Review these year-end best money practices to keep your financial life in tip top shape.
As we get ready to bid 2023 our farewells, I wish you all a very merry year-end, plus health, safety, prosperity, and growth! These are the minutes from Tuesday, December 5, 2023, Club Friends, where we discussed how to end 2023 on a good note and put your best foot forward financially in 2024.
I kicked off the lunch-and-learn hour together with some Club housekeeping items first. We welcomed newbies, and long-timers, reviewed our Club Agreements, and I then talked through the roles you can hold in the Club and clarified how to keep your participation active.
You can subscribe, which makes you a site contact (you also become a site contact when you use the contact page to make contact) and subscribing also gathers your permission to be contacted with notifications. If you don't click the notifications/emails from TMMC, then its website platform automatically deactivates you (won't delete you, just deems you inactive). I can't myself change this status for you, it is just what WiX does automatically. Once inactive, you won't be sent more mails from The Club, notifications stop. To reactivate, you just have to click a Club email again and it automatically knows to start sending you mail again as reactivated. 173 of you are currently "inactive." I may send you a manual email alert to instruct you on how to reactivate (contemplating this still, I hate to bug peeps).
You can become a member of the site too, which gives you extra ability to engage, create a member profile, see others who are members, comment, and soon will extend you special features to connect with me, each other, at Club events and other opportunities non-members won't get. Become a member (see top right of screen on our site to create a log-in). I'd like us all to be "members."
You can simply come as you like to read site pages, without subscribing or becoming a member (for now), but you won't be able to engage/comment on any or view our members' profiles. Soon in 2024, The Club's lunch-and-learn events, and other certain content here, will be for members only. I like this better because it weeds out trolls (not that we've had any yet, but I'd like to keep it that way and foster a more engaged community of Club Friends learning together like the old days).
Then a round of sharing took place about what we're grateful for this year when it comes to the smart money moves, we've made, learned about, or are reaping rewards from today. I shared the data from the meeting registration on Tuesday; 50% of you considered yourselves already "pretty savvy" on the topic of year-end housekeeping moves, 49% considered themselves "not too savvy" and 1% of registered peeps rated themselves at an "expert savvy" level. So, I asked those of you who are expert or pretty savvy to help the others, add more tips, and help validate the lessons. Those of you who are not-too-savvy, I welcomed you to ask all your questions and sponge up all you could. This Club welcomes all of you! Everyone has a role to play.
Club Friends then shared what financial resolutions they met this year (I'll share now that I love how I revised my Trust this year, how I was able to meet a long-running goal and retired early, how I joined an amazing organization as a part-time Encore Fellow doing financial literacy, and before even all of that we started our Club's second home out here on the world wide web!). Thank you all for sharing your gratitude for this Club too, Club Friends! I am grateful too for all of you, your kind words, and all you teach me and the others who are here to learn alongside you.
It's not happiness that brings us gratitude.
It's gratitude that brings us happiness.
After our gratitude session, then we discussed good money hygiene actions to ensure you don't lose any money, that you can maximize all your dollars, and smooth out your tax planning/reduce your tax bill.
These were some of the tips you can do right now before December 31:
You may not be able to impact your last paycheck anymore, with only one paycheck left in 2023! Ready yourself for your first paycheck of 2024 though now/early! (Where contributions or withholdings that you may have maxed will restart up again and impact your take-home pay differently than perhaps you saw at year-end--for example your social taxes would commence again if you reached any caps during the year, your contributions to 401(k) will also start back up, so plan accordingly).
Use any remaining 2023 FSA funds to limit your forfeitures (DCAP, Health FSA, LUFSA, etc.). Calling providers for copies is pretty easy in my experience if you lost any receipts.
Capture your final 2023 paystub and other records and if anything is needing adjustment, correct it very soon so you ensure your 2023 W2 is accurate...
i.e., DD Tracking of stock (reporting your disqualifying dispositions of shares of stock you may have moved out of your employer's plan administrator to another broker where your transaction isn't visible anymore to your employer to report accurately for you on your W2).
i.e., be sure your address is current to avoid missing your W2 mailing.
Consider your income/taxable earnings and gains – do you need/want to sell some stock at a loss to harvest losses and offset higher income/gains? You have about 14 open stock market days left in 2023 to impact your overall tax obligation. Watch out for wash sale rules (where if you buy or sell the same stock within the wash sale rule window the loss won't count)!
If you have not used your employer's Group Legal Plan and planned to unenroll in 2024, at least start / open a group legal plan case # before 2023 ends and start on it (i.e., a Trust/Estate Plan), you can wrap it up anytime in 2024 without re-enrolling for 2024.
Consider donating shares of appreciated stocks this year (if you were going to donate cash anyway, do it with stocks instead), so that you might: 1) be even more charitable, 2) avoid more capital gains (no one has to pay them when you donate them to charity), 3) preserve more of your cash (because you donated shares instead of using up your cash), and 4) boost your giving amount (you can “bunch” lots of shares up too, up to 30% of your adjusted gross income allowed, and then carry any excess over for up to five years – or you can use a Donor-Advised Fund (DAF) as well with even more features like anonymity toward this end).
Then between now and as early in the New Year as you can, here are some other money moves/activities that should serve you well to consider too:
Gather your tax documents (1099s, W2, W2 Breakdown records (check Workday if your employer's records are there), stock vesting/purchase values, tax supplements, etc.) and get ready to prepare your tax return. Estimating your tax bill as early as possible before December 29th may help you with on-time decision making on the above bullet points too!
Review your 2023 spending (check credit card, checking account, and other bank statements) and evaluate any changes to your income to set a new budget for 2024, aim to free up more dollars for paying off debt or for savings/investing even more!
Plan your RMDs if applicable. The SECURE 2.0 Act now helps you put off planning for any Required Minimum Distributions (RMDs) until age 73 (began in 2023), will be age 75 (by 2033). A tip here: A Qualified Charitable Distribution (QCD) can satisfy your RMD and not be taxed when donated to charity (if you were going to donate anyway, consider a QCD).
Also, SSI was just increased (2024 COLAs just arrived), check them out to amend your budget if applicable!
Still employed? Re-up your commitment to maximizing your savings dollars in the New Year. You may have to re-elect a new 2024 $ target in HSA/FSA/DCAP categories each year via payroll (if not annual enrollment window) and re-enroll to be eligible for carry over funds as applicable. Check your 401(k) and IRAs limits.
Decide if your investor risk tolerance level could be higher for more upside potential in future. The more conservative you are, the slower you will compound your growth and the less chance you have of beating inflation as time goes on.
Determine if you can max even more of your family’s (spouse and minor children) savings potentials on a tax advantaged basis too. Children can save in their own HSAs (as long as they're enrolled in an HDHP, and they can save up to the family max on their own if you cover them on your HDHP and don't claim them as a tax dependent), IRAs (as long as they have as much earned income to show), etc.
Review your credit reports often (even weekly right now) for free and target the bad debt with vigor in your budget in 2024! Visit https://annualcreditreport.com to get started.
Consider adjusting your W4 (withholdings instructions form) for 2024 based on your year-end 2023 W2/tax return. Consider minimizing your withholdings without under paying throughout the year. Or consider additional withholdings if you need to adjust. Just aim for a sweet spot where your money wasn't unnecessarily sent to the IRS when it could have stayed in your keeping to invest and grow longer.
Have you begun to gather receipts and file all your claims/reimbursement requests for FSAs (DCAP, Health FSA, LUFSA, commuter, etc.)? You typically have a run-out grace period or buffer for filing claims for expenses logged before year end for each Plan year into the New Year. Know by what day in 2024 you will be claiming 2023’s expenses.
This is also a great time to re-check your beneficiary forms are entirely up to date.
Estimate and expect some tax relief with a bump in cap gains income thresholds, larger income tax brackets (where you can earn more before you’re taxed at next bracket level) and enjoy an increased standard deduction and gift tax exclusion.
Then we reviewed a lot of figures. The chart below shows you what you can save in tax-advantaged accounts such as 401(k), HSA, and IRA in the New Year. Not all employers will offer an additional after-tax 401(k) with a Roth In-Plan Conversion feature (the second row), but those that can consider leveraging one, should look at it too:
The above image is a table I crafted for you showing four types of savings accounts you may be considering / aiming to maximize. You can see for 2024, how much you can put into each type of account and what the catch-up contributors' limits and rules are. These figures, rules, and designs are subject to change. At the time of publishing, this was my best summary of the information available to me. Double check it as you use it!
The subject-to-change (especially annually) table above says that a 401(k) plan now allows $23k to be saved in 2024 with another $7,500 for those turning 50 or older in 'Catch Up' contributions. An After-Tax or Mega Backdoor (AKA Roth In-Plan Conversion) type of 401k design allows a grand total of $69k to be saved and another $7,500 for Catch-Up contributors (not all employers offer this type). From this overall total amount available to you, to know what additional dollars you have the opportunity to save, you must net your regular savings contribution limits first ($23k or $30,500), plus net any employer matches/contributions made to you, and net any estimated true-up dollars you may get in order to know what amount remains in this total allowable limit for you to contribute additional after-tax dollars toward, and then you can convert these additional contributions to Roth savings for your future tax-free growth.
(Note: true-up dollars typically occur after the year ends if you maxed the account early and your payroll contributions stopped such that the employer match on your full year's contributions wasn't yet met by the employer, then this amount gets "trued up" afterwards. So, if you were contributing 50% of your pay and the employer was only matching 3%, when you reached the max dollar amount you could put in toward the first matchable $23k or $30,500 limits, your employer maybe wasn't left with ample opportunity to match all 3% of your pay before those contributions were stopped, and so has to calc that true-up match contribution after year-end).
The table also shows the HSA allows an individual $4,150 and a family $8,300 with $1k more for each person in the family over 55 and IRAs in 2024 are now allowing up to $7k (or $8k for catch-up contributors turning 50 or older). In the heart call-out shape, you'll see a rounded number of total potential savings you might be able to reach in 2024. Wow! Good on you if you're able to do it.
And, Club Friends, if you're still reading along this far, then type "oh the joy in these savings opportunities ahead!" into the comments field way down below... Thank you for letting me know you're reading, by commenting, star-rating, hearting, or sending me a 'lil note. I'd especially love to hear from anyone who was on typo-patrol reading this so that I can fix up any corrections needed.
Finally, some Club Friends shared their exciting resolutions for the New Year, while we also glanced at what the next year of topics will look like at The Money Matters Club. Thank you all for helping build our topics list, Club Friends.
In 2024, we'll be covering budgeting, especially now that so many of you want alternatives to the soon-to-be-obsolete Mint app (now owned by Intuit), and we'll also cover retirement readiness, more savings strategies for IRAs, 401(k)s, backdoor Roths, and HSAs, increasing our tax savvy, estate planning, and more on diversification, asset classes, and the rules for investing. I'm also going to put together a talk for you on all the exciting changes the SECURE 2.0 act is promising in the year/years ahead.
Be well, safe, and merry as you ring in the hopefully prosperous New Year, my Club Friends!
Because money matters,
el*
*Not an expert, just care.
PS - look below for the comments field, become a member by logging in to add a comment. I appreciate your engagement, Club Friends! Contribute even more tips below, or as you sponge them up let us know what you liked!
E.M.Powers ("el") is a regular person with no particular financial credentials or expertise who happens to be a money enthusiast and the founder of The Money Matters Club, a virtual watercooler for like-minded individuals with a thirst for building their own financial health. Since 2006, she's helped thousands of co-workers build their financial literacy and wealth by participating in The Money Matters Club, a community she built on her employer's internal network. Since 2023, she's been attempting to scale The Club's reach through its second home on the World Wide Web. Her opinions--as well as the opinions of all participants--are just that: opinions, which are subject to flawed logic, math, typos and correction. She keeps a growth mindset and is also always learning something new or bolstering her own understanding after discussions at The Club. All information shared is done so with the best intent to inspire and empower others to learn more about money considerations toward building their own financial muscles. Nothing shared is meant as individualized advice that anyone should act on without doing their own curious research and personal decision making. There are no dumb questions at The Money Matters Club. Your financial health and literacy are what this Club cares about. All investing involves risk. All results can and will vary.
Copyright: ©The Money Matters Club, all rights reserved (2023).
oh the joy in these savings opportunities ahead! (LOL)
Oh the joy in these savings opportunities ahead! I didn't know the standard deduction was increasing again, that's great news. Thanks o wise one!
Thank you
oh the joy in these savings opportunities ahead!
Oh, the joy in these savings opportunities ahead!