Mid-Year is an important time to review several significant saving and spending decisions, possibly affecting taxes too. With just under 6 months remaining in the tax year – there’s still time to make a meaningful difference. Consider:
- Confirming amounts being deferred pre- or post-tax into 401k and other retirement accounts (and whether to max out?)
- Evaluating savings goals versus reality
- If not begun yet, giving savings goals a jump start
- Quantifying college savings account contributions
- Creating and funding Trusts
These and other important decisions can be evaluated or adjusted – think of the process as forming goals or “mini-goals”.
- For those contributing to 401k and 403b accounts, take a look at totals of existing pre-tax balances, including IRA and IRA Rollover accounts.
- With the guidance of your financial adviser and tax professional, is it time to start making Roth (after-tax) contributions to these accounts? The maximum 401k contribution limit in 2025 bumped up to $23,500 for those under age 50 and to $31,000 for those age 50 and above.
- PLUS, for those aged 60-63 the max is $34,750 – with $11,250 of that amount considered a “super catch-up” amount.
- If contributions year-to-date are meaningfully below the max, there is could be long- and short-term tax advantages to consider.
- With short-term interest rates on US Treasuries and money markets still above 4% it pays to be socking away cash! Whether savings goals are already in place or in need of formation, take advantage of these generous interest rates while they still exist.
- College savings accounts have annual and 5-year contribution limits with contributions able to be made at any time during the calendar year. Year-end is typically a deadline for annual contributions. Investment changes are limited to two changes per year in most cases, so it is worth looking at investment choices currently in place. Automatic age-based investment choices are available in most cases.
- If funding or creating a Trust is under consideration, there is still plenty of lead time before year-end to strategize and meet with a financial adviser and estate attorney. If a Trust created the need for an extended tax filing, there are several months until the October 15th extension filing deadline (although extensions needed to be requested back in April).
It turns out the mid-to-late July time frame can be an excellent time to review critical tax and savings decisions — with ample time to seek out appropriate advice.
There’s also still time simply to enjoy a fun summer.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice.