November 2024 Blog Newsletter
November Captain’s Log
Three Things Changing in 2025 for Retirement Savings, and Year-End 2024 Reminders
Super-sized 401(k) Catch-Up Contributions for Ages 60 to 63
Introduced in 2001 under President George W. Bush, catch-up contributions allow employees aged 50 and older to make additional deposits into their tax-advantaged retirement accounts. These limits are adjusted for inflation but may not change annually.
In 2025, the catch-up contribution limit for 401(k)s for those aged 50 and older remains $7,500, bringing the total contribution limit to $30,500.
The base 401(k) contribution limit increases to $23,500 in 2025, up from $23,000 in 2024.
A new catch-up provision will take effect in 2025 for those aged 60 to 63. They can contribute the greater of $10,000 or 150% of the 2024 catch-up contribution limit, adjusted for inflation. This makes the maximum catch-up contribution $11,250, raising the total 401(k) contribution limit for this age group to $34,750 ($23,500 base + $11,250 catch-up).
This enhanced catch-up provision is available to participants who are 60 to 63 years old by the end of the calendar year.
Automatic 401(k) Enrollment
SECURE 2.0 aims to boost retirement savings by requiring new 401(k) plans established on or after December 29, 2022, to include automatic enrollment starting in 2025 unless an exception applies.
Initial automatic enrollment rates must range from 3% to 10%.
Contribution rates will automatically increase by 1% annually until they reach at least 10%, but at most 15%.
Employees retain flexibility; they can adjust their contribution rates or opt-out entirely by selecting a 0% contribution rate.
SIMPLE IRAs and Catch-Up Contributions for Ages 60 to 63
In 2024, the annual deferral limit for SIMPLE IRAs is $16,000, with an additional $3,500 catch-up contribution for those aged 50 and older, totaling $19,500. In 2025, the base contribution limit increases to $16,500, while the catch-up contribution for those 50+ remains at $3,500.
Starting in 2025, participants aged 60 to 63 can make catch-up contributions of the greater of $5,000 or 150% of the age-50 catch-up contribution limit. This will raise the limit by $5,250 for those in this age group. Cost-of-living adjustments will begin in 2026.
2024 Year-End Reminders
401(k) Contribution Limits and Deadlines
For most 401(k) plans, the deadline to contribute for 2024 is December 31, 2024. This includes catch-up contributions for participants aged 50 and older.
IRA Contribution Limits and Deadlines
Contributions to Roth or traditional IRAs for 2024 can be made until April 15, 2025.
Excess Contributions
If you exceed the 2024 IRA contribution limit, you can withdraw the excess by the due date of your tax return (including extensions). Otherwise, a 6% tax applies annually on the excess amount left in your account.
Required Minimum Distributions (RMDs)
To avoid excise tax, ensure you take your RMDs on time. RMDs must be calculated separately for each non-Roth IRA but can be withdrawn from one or more of your non-Roth IRA accounts.
5 Ways to Maximize Your Holiday Donations
With Thanksgiving and Christmas right around the corner, the season of giving is here! It’s a special time to give back to your community in meaningful ways. With a little planning, you can make your donations go even further without overextending yourself.
Here are five tips to help you make the most of your holiday giving!
Give the Gift of Your Time
Volunteering is a wonderful way to give back without opening your wallet. This could mean lending a hand at shelters like:
·Rockford Rescue Mission
·Noah’s Ark Animal Sanctuary
·The Salvation Army
·Or food pantries
Volunteering not only helps others, but it’s also a fulfilling way to give back when a financial donation may not be feasible.
Use Your IRA for Tax-Free Giving
If you’re taking Required Minimum Distributions (RMDs) from your IRA, did you know you can donate directly to a charity and skip the tax on that portion? It’s called a Qualified Charitable Distribution (QCD), and it’s a smart way to reduce your taxable income while supporting a good cause. You get the satisfaction of giving, and the charity receives a direct donation.
Start a Donor-Advised Fund (DAF)
Setting up a DAF can make your charitable giving easier and more strategic. With a DAF, you can set aside a big donation now, get a tax break this year, and then decide later how to spread those funds to the charities of your choice over time. Think of it like funding a “nest egg” that can help multiple causes over a few years. This option can also keep you organized, and it’s perfect if you want to donate incrementally.
Declutter and Donate Gently Used Items
The holidays are a great time for a fresh start, so why not clear out some space while helping others? That old sweater, the extra blender, or those books you’ve read (twice) can make a big difference to someone else. Plus, donating items can often be tax-deductible. It’s a thoughtful way to help families while making room for any new holiday goodies you’ll bring in this year.
Plan Your Giving Throughout the Year
We all know how easy it is to feel extra generous around the holidays. By putting a little money aside each month in a “giving fund,” you can ensure you’re able to support the causes you love without stressing your budget. Reviewing your monthly spending also helps you see what’s possible—because being generous doesn’t have to mean overextending yourself! It’s about finding the balance that works for you.
At Anchor Wealth, we’re here to help you manage your budget in a way that aligns with your giving goals. Let’s make this holiday season one of both joy and financial peace, so you can give confidently, now and in the years to come.
Adam’s Nightstand
I am almost finished reading The Advisor Transformation: The Ultimate Guide to Growth, Freedom, and Joy for Financial Advisors by Shawn Sparks.
I mentioned this book last month, but it’s one of those resources packed with so many applicable ideas that I enjoy taking my time, making notes, and then prioritizing the most important items to implement. I work through them one by one.
In the book, Sparks outlines five principles for scaling a business:
Vision: Defining where you’re headed, gaining clarity on how to get there, and creating an exciting plan for becoming the person or business you aspire to be.
Operations: Building the infrastructure, foundations, and processes needed to optimize performance and create raving fans.
Marketing: Sharing what you do with your audience to attract the right people for the right reasons.
Sales: Transferring the belief that you can help your ideal client to the client themselves.
Culture: Cultivating an environment that excites people to show up, work hard, and fulfill their mission.
My goal is to identify the top three priorities within each of these five categories (a total of 15 goals) for Anchor Wealth to focus on in 2025. At Anchor Wealth, I want our team to consistently emphasize continuous improvement across the organization, all for the benefit of the clients we are grateful to serve!
Sand, Turtles and Stingrays
Chris Perry and his family traveled to the Cayman Islands for a beach getaway earlier this month. This was his son Preston’s first trip outside of the US. He loved swimming in the ocean and building sand castles, which he immediately ruined. He was fascinated with chickens roaming free.
The trip’s highlight was their visit to the Cayman Turtle Centre and Stingray City. Chris, Megan and Preston got up close and personal with Stingrays and baby turtles. It was quite an adventure.
Little sister Palmer turned 4 months old on November 3rd. She didn’t make this trip, instead she enjoyed quality time with Grandma and Grandpa. She is busy learning to crawl, sitting up, and sleeping all night!