Financial Reminders Heading into 2023

Happy New Year from Lydford Financial

The first month of a new year is a good time to review your finances and make changes for the upcoming year.  Let us know how we can assist you by emailing George@lydfordfinancial.com

Here are a few reminders:

  1. Review of your asset allocations may show that you need to rebalance your portfolio to meet your long-term goals, especially after the 2022 down year in the stock market.
  2. Review your beneficiary information for your investments, life insurance, and other financial assets to ensure your wishes are fulfilled.
  3. Review your budget to determine if an increase in your savings is possible including for emergencies, retirement, or education (529 plan).
  4. Pay off your holiday debt as soon as possible at the start of the year to free up funds for your other goals, such as savings and reducing other debts.
  5. Set up an emergency fund of at least six months of expenses. If you need to do it over time, then set up automatic monthly savings to accumulate sufficient funds to meet your goal.
  6. Review your federal and state income tax withholding to ensure the amount is sufficient to cover your taxes for the upcoming year. Set up estimated tax payments, or change your withholding is not sufficient to cover your annual tax bill in 2023.
  7. If you are turning age 72 in 2023, set up your Required Minimum Distribution from your defined contribution plan (401(k), 403(b) and 457(b) plans; profit-sharing and other defined contribution plans) and traditional IRA, SEP, SARSEP, and SIMPLE IRA, either as a lump sum, or periodic payments.
  8. Adjust your total contributions for your 401(k), or similar defined contribution plan in 2023 to not more than $22,500 for individuals under 50 and an additional $7,500 for individuals that turn age 50 in 2023, or are already over age 50.
  9. Set up your 401(k), or other retirement plan contributions to maximize the amount of your savings for the upcoming year, so if you are paid bi-weekly the amount is $865.38 ($1,153.84, if over age 50) and if paid twice per month $937.50 ($1,250, if over age 50).
  10. The limit on annual contributions to an IRA will increase to $6,500. The IRA catch‑up contribution limit for individuals age 50 and over is not subject to an annual cost‑of‑living adjustment and remains at $1,000.
  11. The annual contribution limit to a SIMPLE IRA account is $15,500 and a catch-up contribution limit for employees age 50 and over will increase to $3,500.
  12. If you have a high deductible health insurance plan and your employer offers a Health Savings Account (HSA), set up contributions up to a total of $7,750 (family) and $3,850 (each individual) for 2023. A catch-up contribution of $1,000 is allowed for each individual spouse that is age 55 or older, either in the family account for a married couple (both spouses age 55 or older), or in an individual account if only one spouse is age 55 or older.
  13. The income limit for the Retirement Saver’s Credit for low-and moderate-income workers is $73,000 for married couples filing jointly; $54,750 for heads of household; and $36,500 for singles and married individuals filing separately.
  14. Evaluate the amount of 529 plan contributions that you should be making based on family changes, education funding need changes, and investment return changes to evaluate, if you can afford additional contribution amounts and rebalance investments.
  15. Review your life insurance needs and your current coverage from all of your policies to determine if you need more coverage, or less going forward.
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