Remember when the most stressful letters in your life were GPA and SAT? Now there are new acronyms that warrant your attention! Before you get lost in holiday chaos or start mapping out your 2025 resolutions, there are a few financial moves you need to handle. Think of this as your end-of-year homework — except this time, procrastinating could actually cost you real dollars.
401(k) Contributions
- Check if you’ve maximized your annual contribution limit. For 2024, the limit is $23,000 for those under 50, increasing to $23,500 in 2025.
- If you haven’t hit the max, consider increasing contributions before December 31st.
- If you’re anticipating a year-end bonus, consider contributing a portion to your 401(k).
- If you can’t afford to contribute the full $23,000, aim to contribute at least as much as your company’s match.
- Remember: Every dollar you contribute reduces your taxable income.
- Take time to review your 401(k) investment options and allocations.
IRA Contribution
- The traditional and Roth IRA contribution limit for 2024 is $7,000.
- You can make 2024 contributions until April 15, 2025.
- Roth IRA eligibility depends on your Modified Adjusted Gross Income (MAGI):
- Single taxpayers: Must be less than $161,000
- Married filing jointly: Must be less than $240,000
Note: Your contribution amount may be reduced if you’re near the upper income limit.
- Consider a backdoor Roth IRA strategy if you’re above income limits.
Health Savings Account (HSA)
- HSAs offer triple tax benefits:
- Contributions are tax-deductible.
- Assets grow tax-deferred.
- Withdrawals are tax-free if used for qualified medical expenses.
- You can even invest these assets for long-term growth.
- 2024 contribution limits:
- Individual coverage: $4,150
- Family coverage: $8,300
- 2025 contribution limits:
- Individual coverage: $4,300
- Family coverage: $8,550
- You can contribute to this year’s HSA until April 15, 2025.
- Eligibility: Your health insurance plan must have a deductible over $1,600 for individuals or $3,200 for families.
- If your company doesn’t offer an HSA but your plan qualifies, you can open an HSA and contribute directly.
Flexible Spending Account (FSA)
- Most FSA plans have a “use it or lose it” policy, where funds must be used by year-end. If you have remaining funds, consider:
- Updating your medicine cabinet with FSA-eligible items, such as
- Over-the-counter products and medications
- First aid supplies
- Seasonal items (allergy products, sunscreen, steam vaporizers)
- Scheduling routine checkups or specialist visits not covered by regular insurance
- Getting eye exams or purchasing prescription glasses/contacts
- Booking dental visits
These year-end tasks aren’t about perfection but about progress. Financial planning is a continuous journey, not a destination. Take it step by step, be kind to yourself, and remember that small, consistent actions lead to significant financial growth.
Here’s to ending the year strong and starting the next one with confidence as you build your financial foundation!