DECEMBER IS A GREAT TIME TO TAKE A LOOK AT YOUR CURRENT WORKPLACE BENEFITS AND MAKE ANY CHANGES NEEDED. IT’S ALSO ABOUT THE TIME THAT MOST OF YOU WILL RE-ENROLL IN HEALTH BENEFIT PLANS AT WORK.
Some advice from your favorite tax and investment advisors:
Your Retirement Plan
Take a look at how much you’ve contributed this year, whether you have a 401(k) or other retirement plan through work. Consider bumping up your contributions to the maximum amount so you’ll be able to take full advantage of these offerings in 2017.
You may even want to convert your plan to a Roth IRA. This would make sense for investors who expect to be in a higher tax bracket after they begin taking distributions. There is no upfront tax deduction for Roth IRA contributions.
Your Health Benefits
Many people are spending this time of year enrolling in health benefit plans at work. It’s a great time to look at what you’re currently enrolled in and decide if it still makes sense for you. But there are two big perks with significant tax benefits that many people overlook – dependent-care flexible spending accounts and health savings accounts.
A dependent-care FSA allows you to set aside money on a pretax basis to be used for eligible child-care expenses. This lowers your overall taxable income because contributions are deducted from your income on a pretax basis.
Health saving accounts are only available to those enrolled in high-deductible health insurance plans, along with some strict criteria. Contributions are made with pretax dollars (in most states), assets grow tax-free and distributions are tax-free (if used to pay for qualified medical expenses or as a reimbursement). This may make sense if you have minimal medical expenses.
Make sure you’re aware of these benefits that are available through most workplaces. If you have any questions about them, feel free to give us a call! We’d be happy to set you up with one of our advisors.