It’s that time of year when we remind you to make any final contributions to your prior year IRA, Roth, or HSA accounts. These contributions are due by the first due date of personal tax returns, so April 15th for most of the country.

IRA and Roth Contributions

  • The allowable 2023 contribution amount is $6500 per person.
  • Catch up – An extra $1000 is allowable if you were age 50 by December 31, 2023.
  • Planning for 2024 – Contributions increase to $7000 per person, plus the $1000 for Catch-up.
  • Your deduction may be limited if you or your spouse participate in a retirement plan at work and your adjusted gross income exceeds certain levels. But you may be interested in a non-deductible IRA contribution, which can be converted to a Roth IRA (referred to as the “Back-door Roth”). Be sure you understand the taxation of any conversion to Roth before you make that happen.

HSA Contributions

  • The maximum 2023 HSA contribution is $3850 for self-only coverage, and $7750 for family coverage.
  • Catch-up – An extra $1000 is allowed if you were age 55 by December 31, 2023.
  • Planning for 2024 – Contributions increase to $4150 for self-only and $8300 for family coverage.
  • If your employer contributed only a portion of your HSA contribution during 2023, you are able to make up the difference if contributed by the first due date of your 2023 tax return. You will receive a tax deduction for this additional contribution on your individual federal tax return.
  • Don’t forget to get your HSA funds invested. The beauty of the HSA is that the contributions are tax deductible, the growth is tax-free, and you will be able to take those funds in to your household tax-free at any time in your retirement years if reimbursing yourself for out-of-pocket medical expenses. This is better than a regular IRA or retirement account whose distributions will be taxed in retirement.
  • For this reason, we recommend not taking funds out of that HSA currently, allowing it to grow for years.
  • We also ask you to save your receipts for all current out-of-pocket medical costs you are incurring, as those will qualify as substantiation for tax-free reimbursements of medical costs in your retirement years, without a time limitation.

Contact your LSL Advisor if you have any questions or need any analysis to assist you with these opportunities. And have a happy Spring!

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