Spring Forward: Renew, Refresh, and Revitalize Your Finances
March begins the transition to spring, including the much-anticipated spring forward time change. While rainy days may still be ahead, the promise of sunnier weather is on the horizon. This is an ideal time to embrace a refresh. Consider dedicating time to organizing your schedule to include time for routine check-ups, not forgetting tax and Required Minimum Distribution (RMD) deadlines, retirement contributions, and any financial maintenance to ensure your financial wellbeing.
Tax Deadlines
Your personal return is due by Monday April 15, 2024. You can request for an extension to push the filing deadline back to October 15, 2024, by filing Form 4868. You can do this by certified mail or through your tax preparer. Just remember, you still must pay the tax due by the original April 15th deadline. Unfortunately, an extension to file isn’t an extension to pay. Please always consult your tax professional prior to filing any forms.
RMDS
The Secure Act 2.0 raised the age at which you are required to take RMDs. The account owner must begin taking RMDs once they reach the age 72 (73 if you reach age 72 after Dec. 31, 2022). Any amount of the RMD not taken timely will be taxed at 25% - it is possible to drop to 10% if the RMD is timely corrected within two years.
Retirement Contributions
Retirement contributions to Traditional and Roth IRA’s must be made by April 15, 2024, for the 2023 tax year. These are limited to $6,500 if you’re under age 50 and $7,500 if age 50 or over.
Make sure to withdraw any excess contributions, plus earnings on the excess by the due date of your return (4/15/24 or 10/15/24, if you extend). Tax and penalties on the amount not withdrawn depend on your age.
March Maintenance
Much like you would schedule time for a doctor check-up or a dentist visit, it is important to take time to make sure your finances are in tip-top shape.
Start by assessing your budget. A budget gives you an overview of where your money is going monthly.
· Track Your Expenses – Utilize your bank and credit card statements to review spending.
- If you need a starting place, begin with keeping a detailed record of all expenses for a month to create a baseline budget.
· Set Budgeting Rules – Use budgeting principles, like the 50/30/20 rule: 50% needs (food, housing, gas, utilities, minimum debt payments), 30% wants (travel, entertainment, shopping), 20% savings & debt payments (emergency fund & retirement; payments above the minimum due). Your budget gives a grand overview, but there are other areas to investigate.
· Insurance – Review policies to ensure you have adequate coverage on auto, home, life, umbrella, and jewelry. Request quotes to ensure your premium is competitive.
· Interest Rates – How much are your deposits earning? Compare other institutions/products. Consider reducing high-interest rates first and/or consolidating to a lower rate.
· Discretionary Spending - Subscriptions, memberships, and additional fees - What do you pay for that is no longer needed or that may have been forgotten?
Are you expecting a tax refund? Consider a strategic approach to make the most of it.
· Emergency Fund – Do you have one equal to at least 3-6 months of expenses?
· Liabilities – Reduce credit card debt, home, auto, and student loans debt.
· Do you have a big goal in mind? – Start saving for a vacation, buying a car, retirement planning, kid’s college, and/or philanthropy, to name a few.
These are just a few out of the many ways you can consider assessing your finances. Be sure to connect with a financial planner and tax preparer for a personalized approach.
March Madness
Amidst this busy season, —tax season, planning for vacations, and gearing up for spring—our team hopes to add some play to your day. We are excited to kick off our group March Madness tournament and you’re invited. Follow the link March Madness or head to our Instagram page (@allentrustcompany) to join. We will be announcing the winner on our Instagram 04/09/24.
Tara Denton is a Senior Tax Specialist, bringing over fifteen years’ experience in accounting, tax, financial planning, and client relationship management. She enjoys using her technical background and passion for wealth planning to help clients pursue their financial goals.
Krystal C. Lee, MBA, CFP® is the Director of Financial Planning and a Portfolio Manager. As a CFP® professional, she enjoys balancing her introversion and extroversion characteristics, permitting her to think and care deeply in creating a financial plan. Alongside being a CERTIFIED FINANCIAL PLANNER™, Krystal earned the Certificate in ESG Investing awarded by the CFA Institute.
To speak with Tara Denton or Krystal Lee, please contact our office at (503) 292-1041 or via email at info@allentrust.com.