The New Year will be here before we know it, and with it comes a list of things to look into now to make sure you start 2022 off right.
2022 RETIREMENT CONTRIBUTION LIMIT INCREASE
Did you know that retirement contributions have been increased for 2022? You’ll be able to contribute up to $20,500 into your employer sponsored retirement plan (401(k), 403(b), 457) in 2022. The $6,000 catch up contribution still applies for those over 50. If you have a SIMPLE IRA, your maximum contribution has also been increased to $14,000. The $3,000 catch up contribution for those over 50 still applies.
What does this mean for you? December is the perfect time to adjust your withholdings, so that your contributions beginning in January will have you evenly contributing into your retirement plan over the course of 2022 up to the new maximum amount.
COVID-19 RELIEF FOR STUDENT LOAN BORROWERS ENDING
[On December 22, this relief act was extended to May 1, 2022.] Were you aware that the COVID-19 Relief for Student Loan Borrowers ends Jan. 31? If you have federal student loans, beginning in February you will be required to pay your loans, and interest will begin to accrue once again. Perhaps you’ve continued to pay down your loans during the deferment, taking advantage of the fact that 100% of your payments have been going toward principal, but maybe you haven’t. Either way, it’s been a long time since this plan was put into place and a lot may have happened to you since then. You may have also forgotten what your interest rates are.
Don’t wait until February to examine your rates. Call your loan servicing agency now. You may be eligible for a different repayment plan or it may be time to refinance your loans to a lower interest rate. Our financial counselor, Addie, is available to call with you to find the best options available to you. Schedule a call using Addie’s Calendar.
BENEFITS REVIEW
Open enrollment may have come and gone already for you, but did you know there are changes that can still be made outside of open enrollment? For instance, we have several clients getting married in 2022, and major life events such as marriage allow for changes to your benefits.
Similarly, if your current health insurance plan qualifies you for an HSA (Health Savings Account) you can open that up at any time, and make adjustments outside of open enrollment based on a qualified life event (marriage, the birth of a child, etc). HSAs can be a great way to save additional funds for future use. The maximum contribution limits are also increasing for 2022, $3,650 for individuals ($4,650 for those over 55) and $7,300 for families ($8,300 for those over 55). HSA deposits are tax free going in, can be invested and grow tax free, and are tax free coming out, as long as they’re used for qualifying purposes. Another advantage: the funds in these accounts roll over from year to year.
GET READY FOR TAX SEASON
There are several benefits to filing early including the availability of CPAs and tax-preparers, the time needed to create an accurate return, lowered chance of tax fraud or identity theft, and more time to make payments or to receive a refund earlier. In order to file early, you have to have your documents ready to go by mid-February. Gather your receipts now: business expenses, charitable donations, mortgage or property tax payments. And take a look at our minimizing my taxes blog before 2021 is over!
SET FINANCIAL GOALS AND AUTOMATE YOUR SAVINGS
Finally, there’s no time like the present to set your financial goals and automate your savings.
SEEK FINANCIAL ADVICE
Regulations change each year and although we’ve made you aware of some of them here, navigating and maximizing every area of finance can be tricky for Americans. Reaching out for help on a comprehensive financial plan is smart. As mentioned in our last blog, a Vanguard study showed that an advisor can add up to 3% net value for a client.
Merino Wealth is here to help! Current clients know that we’re constantly working together to tweak and adjust your goals. For new clients, providing one-on-one financial advice and planning to meet your personal financial goals is what we do best. Schedule a Free Consultation today and start 2022 off right!