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Tax Updates and Reminders


As we head toward the end of the year, consider maxing out your contributions on tax-advantaged accounts to help manage your 2019 return. While some accounts, such as an IRA or Health Savings Account (HSA), allow you to continue making contributions up until April 15, 2020, most payroll-deduction plans such as a 401(k) will stop at year-end (for 2019 contributions). Employees can contact their plan administrator to learn how they might make additional contributions above what is automatically deferred from their paycheck.1


This may also be a good time to strategize your retirement plan contributions for next year. If you’d like to discuss strategies for any employer, retirement, college or health savings account contributions, please let us know.


The 2019 contribution limit for 401(k) plans is $19,000, up $500 from last year. Taxpayers age 50 and older can contribute an additional catch-up contribution of $6,000.2


If you haven’t maxed out your Individual Retirement Accounts (IRAs), you may contribute up to $6,000 in 2019. Be aware that’s the total amount that can be contributed to all the IRAs you own, including Traditional and Roth. People age 50 and older can add another $1,000 to their IRA accounts in 2019.3


HSA contribution limits for 2019 have increased to $3,500 for individuals and $7,000 for a family, when accompanying a high-deductible health plan. The catch-up contribution isn’t available until age 55 and older, for an extra $1,000.4 An HSA can be used as an emergency savings account for any reason, as long as you follow the rules. You can pay some of your qualifying health care expenses out of pocket, but be sure to keep the receipts. Should you need additional funds, you can pull amounts up to the paid receipts from your HSA without incurring any tax liability.5


If you don’t need the money for immediate expenses, consider using those reimbursed funds as contributions to your HSA for the next year, which offers the advantage of being tax deductible once again. Even if your regular contributions are made by payroll deductions through your employer, you can make direct contributions from your personal checking account, and then deduct that additional amount on your personal income tax return.6 Just don’t exceed the annual contribution limit.

 

Content prepared by Kara Stefan Communications.


1 Sandra Block. Kiplinger. Oct. 31, 2019. “10 Year-End Moves to Lower Your 2019 Tax Bill.” https://www.kiplinger.com/slideshow/taxes/T055-S003-10-year-end-moves-to-lower-your-2019-tax-bill/index.html. Accessed Oct. 31, 2019.

 

2  Julia Kagan. Investopedia. June 19, 2019. “401(k) Contribution Limits for 2019.” https://www.investopedia.com/retirement/401k-contribution-limits/. Accessed Oct. 31, 2019.

 

3  Eric Reed. Smart Asset. July 17, 2019. “IRA Contribution Deadlines for 2018 and 2019.” https://smartasset.com/retirement/ira-contribution-deadline. Accessed Oct. 31, 2019.

 

4 Kathryn Mayer. Employee Benefit News. 2019. “From HSA contributions to 401(k) limits, 11 numbers to know for 2019.” https://www.benefitnews.com/list/from-hsa-to-401-k-contribution-limits-11-numbers-to-know-for-2019. Accessed Oct. 31, 2019.

 

5 HASstore. Louise Norris. “Compound It! How to use your HAS as an emergency fund.” https://hsastore.com/learn/basics/hsa-emergency-fund. Accessed Nov. 20, 2019.

 

6 National Benefit Services. “HSA Frequently Asked Questions.” https://www.nbsbenefits.com/hsa-frequently-asked-questions/. Accessed Oct. 31, 2019.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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This material is for general information and education purposes only.  Information is based on data gathered from what we believe are reliable sources.  It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.  It should also not be construed as advice meeting the particular investment needs of nay investor.

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