Happy New Year!
I can hardly believe it’s 2012. As a child, the thought of the year 2012 would conjure up futuristic visions of space-age technology. To some degree, today that technology is a reality. What will tomorrow bring? Imagine what the next ten years will bring?
What will 2022 look like for you financially? Are you doing the right things today to create financial balance between today and tomorrow? Here are a few of the changes put into place within our tax code to allow you to save for your future:
401k & 403b contribution limits increased from $16,500 to $17,000. The catch-up provision remains unchanged at $5500 for those 50 and older.
Traditional and ROTH IRAs remain unchanged at $5000 with a $1000 catch-up provision for those 50 and older.
The maximum amount allowable for SEP contributions increased by $1000 for 2012 from $49,000 to $50,000.
SIMPLE IRAs remain unchanged at $11,500.
Health Savings Accounts also will see an allowable increase for contributions:
While the above changes do not represent the entirety of the tax code changes (I only wish!), the above list is simply a quick guide to some of the more commonly used investment vehicles. It’s also wise to speak with your tax preparer to discuss the ability to maximize the tax advantages available for your specific situation.
Our tax code gives us many opportunities to create tax savings while saving for our future, especially for self employed individuals. We need to take advantage of these opportunities. I would suggest making a commitment (maybe as a New Year’s resolution) to make the most of the above opportunities and save for your future.
One of my favorite financial tenets is to “Control What You Can Control.” Essentially, your tomorrow will be financially brighter if you can control how much you spend, how much you save, and how much you pay in taxes. By utilizing a tax-advantaged retirement plan, two of the three tenets can be met: savings and controlling taxes.
As a holistic financial advisor, I don’t simply throw out the new retirement contribution limits as a matter of fact. I discuss these limits as a way to encourage us all to take advantage of saving for our future, reducing taxes, and creating a balanced life financially.
I wish you all a joyous 2012!