Are You Ready for 2025?

As we approach the dawn of a new year, it’s the perfect time to reflect on the achievements and lessons of the past and set our sights on the exciting possibilities that lie ahead. 

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Remember, the New Year is not just a change in the calendar; it’s an opportunity for a fresh start and new beginnings. Let’s step into 2024 together!

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Wishing you a joyful and prosperous New Year!

Important 2025 Numbers

There are lots of important numbers that individuals need to keep in mind. In some cases, those numbers are annual limits that change each year. Other times, the figures do not often change, but are used frequently. 

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This is a two-page “Important Numbers” summary guide. This quick reference guide covers the most important annual limits as well as figures that are commonly referred to during the year. It includes:

• Tax rates for MFJ, Single, and Estates/Trusts

• LTCG rates for MFJ, Single, and Estates/Trusts

• Standard deductions for MFJ and Single

• Social Security annual limits (including earning limits)

• Full Retirement Age chart

• Social Security taxation summary for MFJ and Single

• IRMAA surcharges

• Retirement plan annual limits

• Traditional and Roth IRA annual limits

• Estate and gift tax annual limits

• HSA annual limits

Important Milestones

There are many important milestones that you need to keep in mind. Eligibility requirements often depend on a client’s year of birth, residency, or other personal circumstances. 

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This quick reference guide covers key milestones to keep in mind across your client relationships. It covers ages that affect:

• Child-related income taxation

• Catch-up contributions

• Retirement plan withdrawals

• Medicare

• Social Security

Estate Planning Document Checklist

Estate planning is a critical aspect of the financial planning process. Reviewing your documents is an important exercise, both at the outset and throughout the advisory relationship. However, this can be a daunting task for both clients and advisors, who may find the exercise tedious and, perhaps, confusing.

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To help guide your document review, we have created this checklist. It covers key considerations regarding the most common estate planning documents, including:

• Wills

• Living Trusts

• Irrevocable Trusts

• Powers of Attorney

• Living Wills

Savings Accounts to Consider

When you have a surplus of cash on hand and you want to save for the future, you often need help identifying all of the different account types to consider. This checklist provides a structured outline to guide you regarding available and appropriate saving strategies. It covers accounts across the following categories:

• Foundational Savings

• Healthcare Savings

• Retirement Savings

• Employer-Provided Benefits

• Business Owner Savings

• Accounts To Help Future Generations

• Tax-Deferred Insurance Options

• Other Account Considerations

Employee Benefits Checklist

Electing benefits can be a daunting task, and it’s difficult to know which benefits best suits your needs. 

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This checklist covers the key issues to consider when you must make a decision surrounding your employer-provided benefits.

• Employer-sponsored retirement plans

• Medical insurance, life insurance, and disability insurance

• Coordinating employer benefits with savings, fund-sourcing, and tax planning needs

• Impact on their overall financial plan

ROTH IRA Eligibility

A Roth IRA is a great option for clients looking to save after-tax dollars, offering the opportunity for tax-free growth and relaxed distribution rules. Unfortunately, eligibility to contribute to a Roth IRA is subject to restrictions, which can cause confusion.

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To help make the analysis easier, we have created the “Can I Contribute To My Roth IRA?” flowchart. It addresses the key eligibility considerations, including:

• Earned income

• Other (traditional) IRA contributions

• Filing status-based MAGI thresholds

ROTH Vs. Traditional IRA - Which One?

A Roth IRA is a great option for clients looking to save after-tax dollars, offering the opportunity for tax-free growth and relaxed distribution rules. Unfortunately, eligibility to contribute to a Roth IRA is subject to restrictions, which can cause confusion.

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To help make the analysis easier, we have created the “Can I Contribute To My Roth IRA?” flowchart. It addresses the key eligibility considerations, including:

• Earned income

• Other (traditional) IRA contributions

• Filing status-based MAGI thresholds

Contribute to ROTH 401(k) ?

Roth 401(k)s have become an increasingly popular alternative to traditional 401(k)s, allowing participants to make after-tax salary deferrals to their employer plans. Many clients may have the opportunity to contribute to a designated Roth account in their 401(k), but are uncertain about the best savings strategy for their personal circumstances.

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This flowchart helps guide you through a series of considerations that will inform your decision whether to contribute to a Roth 401(k), and covers:

• Future tax rate expectations

• Roth IRA eligibility

• Employer matching considerations

• RMDs and future rollover options

• Additional savings opportunities through backdoor Roth contributions

Social Security Considerations

Navigating Social Security retirement benefits can be challenging, and many clients find it difficult to make the right decisions about how to file.

With our guidance, you’ll be able to  determine the best approach for your Social Security benefits, while also considering how these benefits may align with your broader financial goals. 

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This checklist highlights the key factors you should consider when making decisions about your Social Security retirement benefits, including:

• Whether they should file early or delay their benefits.

• The various claiming options available to them.

• How to coordinate benefits with their spouse or ex-spouse.

• The impact of their benefits on other tax-planning strategies.

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Reviewing Your Paystub

A pay stub is a valuable source of information when building financial models and evaluating cash flow. It provides insight into income, tax, retirement savings, various insurance costs, etc.

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A periodic paycheck review can be a productive exercise, demonstrating how your earnings translate into net pay. We can help them to understand the automated tax withholdings, savings, and payments that you make each pay period, and appreciate any employer benefits that augment your compensation package.

This flowchart guides you through a series of considerations when reviewing your paycheck. It covers:

• Hours worked and vacation time

• Tax withholdings

• Voluntary payroll deductions

• Pre-tax vs. after-tax expenses

• Employer-paid benefits

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Can You Contribute to HSA?

The HSA contribution rules are generally straightforward. However, the rules can become complicated in years when there will be a change to healthcare coverage. Perhaps a client is moving from individual to family coverage, or they are leaving their health plan, or they are starting Medicare. In these instances, it is important to revisit the rules and apply them to your unique situation.

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 This flowchart considers:

• The minimum deductible requirements for HDHP

• The maximum out-of-pocket expense for HDHP

• Contribution amounts

• Impact if HDHP coverage starts or changes this year

• Full Contribution Rule and Last-Month Rules

• HSA and Medicare coordination

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HSA Distributions & Potential Penalties

An HSA account is one of the most tax-efficient savings accounts available to investors. While many of the distribution rules are straightforward, there are several factors and exceptions that should be considered before a client takes a distribution from their HSA, including:

• Classification as a Qualified Medical Expense

• Eligibility of LTC insurance premium payments

• Eligibility of health insurance premium payments

• Impact if the distribution occurs before/after turning age 65

• Use of HSA funds to pay Qualified Medical Expenses of family members

• Timing of expenses

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Investment(s) Review Considerations

A portfolio review can help you evaluate and confirm your strategy, ensuring alignment with your financial goals. 

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This checklist includes:

• Investment objectives

• Time horizon and risk tolerance

• Diversification and asset allocation

• Tax management, including capital gains and the NIIT

• Performance monitoring