Take Advantage of Retirement Accounts to Lower Your Tax Liability

Year-end tax planning isn’t just about reducing your taxable income; it’s about setting yourself up for long-term financial success. Leveraging retirement accounts like 401(k)s and Health Savings Accounts (HSAs) can significantly impact both your future retirement and your immediate tax situation. Here’s everything you need to know to maximize these opportunities.

401(k) Plans: Your Tax-Advantaged Retirement Tool

A 401(k) allows you to contribute pre-tax dollars, lowering your taxable income for the year. Employer contributions can further boost your savings.

Employee Contribution Limit (2024): $23,000
Combined Employee and Employer Limit (2024): $69,000
Catch-Up Contributions (Age 50+): $7,500 additional, raising your limit to $30,500

Did You Know?
Many 401(k) plans now allow for Roth 401(k) contributions, which grow tax-free. If your plan supports after-tax contributions, you can contribute beyond the standard pretax and Roth limits (up to the $69,000 combined limit). This is ideal for those who want to supercharge their retirement savings.

What Are the Tax Benefits of a 401(k)?

Reduces your current taxable income.
Employer contributions grow tax-free until withdrawal.
Contributions made today compound over time for significant future growth.

Health Savings Accounts (HSAs): The Triple Tax Advantage

HSAs are another powerful way to save, particularly for those with high-deductible health plans. They offer a rare triple tax advantage:

Contributions reduce your taxable income.
Growth within the account is tax-free.
Withdrawals for qualified medical expenses are tax-free.

Contribution Limits (2024):
- Individual: $4,150
- Family: $8,300
Catch-Up Contributions (Age 55+): $1,000 additional
Looking Ahead (2025):
- Individual: $4,300
- Family: $8,550

Pro Tip: HSA funds roll over year after year, so you’re not pressured to spend them within the same calendar year. They’re an excellent way to save for future healthcare expenses, even in retirement.

Timing Is Everything: Make Contributions Before Year-End

To lower your tax liability for 2024, contributions to your 401(k), IRA, and HSA must be made by specific deadlines:

401(k): Contributions typically must be made through payroll by December 31.
HSA and IRA: You have until the tax filing deadline (April 15, 2025, for 2024 contributions).

Beyond Retirement Accounts: Other Tax-Saving Tips

Max Out IRA Contributions:
In addition to a 401(k), consider contributing to a traditional IRA (limit: $6,500 in 2024; $7,500 if age 50+). Contributions may be tax-deductible depending on your income and access to a workplace retirement plan.
Consider a Roth Conversion:
If your income is lower this year, converting traditional retirement savings to a Roth account may save you taxes in the long run.
Consult with a Tax Professional:
Tax laws are complex, and not all strategies work for everyone. A professional can help you customize a plan to meet your goals.

Partner With Us for Expert Guidance

At RSK TAX AND CONSULTING, LLC, we specialize in tax strategies that help you maximize savings while preparing for a secure retirement. Our personalized approach ensures that you’re making the most of your options.

📞 Contact Us Today: Let us help you finish the year strong!