Your 2023 Financial Checklist!

Your 2023 Financial Checklist!

January 17, 2023
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Welcome to the first quarter of 2023!  Now is the time to be thinking through financial planning considerations for the entire year. 

Here is a quick 2023 financial checklist:

  1. 401(k) contributions – Spend some time making sure your 401(k) is properly configured and balanced. Are you on track to invest the desired amount into your workplace retirement plan? The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased to $22,500, up from $20,500 in 2022. Investors 50+ who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan have a catch up amount that is increased to $7,500, up from $6,500. The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans is increased to $3,500, up from $3,000.
  2. Funding for IRA’s and *Roth IRA’s in 2023 – Roth IRA’s are one of the best places to invest some extra cash that you may have. Put that cash to work in the tax-free Roth IRA. The limit on annual contributions to an IRA increased to $6,500 in 2023, up from $6,000. The IRA catch‑up contribution limit for individuals aged 50 and over remains $1,000.
  3. Rebalance - If you do not have automatic rebalancing set up on your accounts make sure you review your accounts and see if you should rebalance the allocation.  It’s a good habit to periodically review the asset allocation of your accounts.
  4. Required Minimum Distributions - In the final days of 2022, President Biden signed into law several provisions intended to boost Americans' financial readiness for retirement, including Secure Act 2.0. SECURE 2.0 contains dozens of provisions, but one key change is critical to understand. Starting January 1, 2023, the age at which owners of retirement accounts must begin taking required minimum distributions (RMDs) increased to 73 years of age. And starting in 2033, RMDs may begin at age 75.  If you have already turned 72, you must continue taking distributions, but if you are turning 73 this year, you may want to revisit your approach for these new changes.
  5. Capital Losses - These can be realized in taxable accounts.  If you have not done so you can investigate whether this strategy makes sense for you.
  6. Future Tax Hike - A tax rate hike in 2026 is a matter of law when the TCJA tax cuts expire.  Current tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37% will revert to previous rates of 10%, 25%, 28%, 33%, 35%, and 39.6%.  Consider strategies such as funding Roth IRAs and life insurance to build a more tax-efficient investment plan.
  7. Tax-Free Gifting –The annual amount you may gift another person without being taxed is $17,000 in 2023, which is increased from 2022. You may give up to $17,000 each to any number of individuals without triggering a gift tax.  
  8. Beneficiaries – Make sure to check who is listed as a beneficiary on each of your accounts so it accurately reflects your life and family today. Often, beneficiaries are not frequently updated after the initial account establishment period.
  9. Insurance Needs – It's likely you review your health benefit options each year during open enrollment if your employer offers health benefits, but do you also review annually other insurance types such as auto, home and life? If you take some time to review your coverage annually, you may discover the policy you have been auto-renewing for years is no longer a good fit or is no longer the best value you could receive from a different company. 

Have questions or need help in accomplishing your 2023 financial goals?  Give us a call at Seagraves Financial Group. 

*A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

**This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.