Announcer:
It is time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly.
Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member of FINRA, SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management, are not affiliated. Cambridge does not offer tax advice. Now, here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning and welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS. Well, this is Nate Kreinbrink bringing you today’s show, first show of the new year. 2025 is upon us. Again, as we’ve said over the last couple of weeks, it is hard to believe how fast 2024 has flown by. Obviously, into the new year. Hopefully, everybody had a very happy holidays, were able to take some time to enjoy the seasons, the holidays, spending time with friends, family, your loved ones, and really, again, appreciating those moments as they continue to happen. It’s definitely a special time.
I was able to make it back home to Ohio to my parents’ place for a few days in between Christmas and New Year’s. It’s always a adventure trying to plan a trip that time of the year, not knowing what weather’s going to be like when you’re heading basically six hours due east, but again, we were very fortunate this year to be able to make it and make it home. Really no weather issues other than having to drive in rain the whole way back, which again, isn’t the best, but definitely better than snow and ice.
Again, it was a good holiday season. Hopefully, everybody had one off. Into the new year, it’s a exciting time, I guess, as you see a whole new year upon us. New Year’s resolutions are a big thing this time of year as we get into, again, promoting 2025. What are we going to do? What are our goals? What are our aspirations? Obviously, when you look at New Year’s, resolutions are a very popular thing to, again, get healthy, exercise more, eat better.
Financially, there’s a lot of resolutions that go along with it as far as, again, spending less, saving more, putting yourself in a better position financially, not just for this year, but again, to position yourself in a better financial position as we get closer to retirement. That’s usually through the form of saving more, whether that’s through a personal investment account, a retirement account, employer plan at work. Again, those are a lot of the main resolutions that we see.
Again, they’ve done articles, and the majority of it either is to better yourselves physically or again, financially to save more. Hopefully, if you made them, you’re committed to sticking to them, and again, continue to make those New Year’s resolutions are reality, and again, have a great 2025.
Again, winter weather is upon us, but it’s been pretty mild here, and I know there’s a lot of other areas in the United States, south of us, east of us, that have been getting more than what we have. I even seen Dallas is expected to get hit with a pretty good winter weather front coming through there Thursday into Friday, so again, we’ll see how that goes. You look outside where we are at in this area, and we are seeing grass, so hopefully, that continues taking us to mid-January, and then never know what we’re going to get.
Again, as the new year is upon us, again, we kind of look at shifting our focus. Again, when you get to the new year, I’ll have Andy Ferguson with NelsonCorp Tax Solutions on with us next week, third Wednesday of every month. We’ll be talking taxes. I’m sure a big focus of his will be that you will start to be getting those tax forms in the mail for last year. Again, continue to just save all those. Again, his big message all the time is if you don’t know if you need to bring it or not, bring it. Let them tell you that you don’t need that. Again, start saving those. Get those all into one place because, over the next couple of weeks, they will be getting to you.
Another thing that we look at when we get to a new year is sometimes, whether your employer has it or the way you have it set up, is that your income changes when you get to a new year. If you get a raise at the start with a calendar year, it’s important to again, understand that that change of income, is that going to change your withholdings that you have taken out from a tax perspective. Do you need to look at that and say, “Do I need to withhold any more? Is my withholding that I have elected on my tax forms exactly how it should be when I get each paycheck?”
Again, another thing for you to bring up when you get your taxes done here in the next couple of months is again, give your tax preparer a little update to say, “Hey, this is what I’m making this year. This is what I’m withholding in my own on par to do that.” Again, we have now, again, 12 months to make changes. If we don’t like the way our tax return is going to come out, we can make changes to correct that, and we have, again, 12 months to be able to gradually make those changes to see how we want that to happen. Again, something to keep in mind. You can kind of control that a little bit where we again, can control what that either refund or what we pay in is at the end of the year based off from our tax returns that we’re going to have.
Another thing to look at is, again, any retirement plans that you have at work. Again, does your contribution rate change? A lot of plans now are going to an automatic 1% increase each year unless you opt out of that. Again, you may be putting in 5%. We get to a new year, it may automatically ratchet up to 6% withholding, again, unless you physically go in and opt out of that. Again, it’s a good thing to continue to save more, especially if you’re getting a pay raise, just continue to save more of what you were getting with that pay raise, but understanding where those contributions are, how your plan works, and again, maybe if it doesn’t automatically ratchet up, maybe you want to physically go in there and ratchet it up and see where those are at, and then understanding how you are saving.
Are you saving pre-tax, or are you saving after-tax in the Roth world? A lot of plans now are becoming more and more common that they offer a Roth 401K saving option. If your plan does, it is definitely something to consider and then seeing how that fits, what it would change, and again, the benefits now versus the benefits later. Obviously, the tax differences between each one from saving pre-tax versus after-tax in the Roth, but again, there’s a lot more options out there for people to save. Whether you’re aware of them or not, understanding it will put you in the best position to be able to again, have options later on down the road.
The other thing with retirement plans at work is again, taking a look at your allocations inside of your plan. You may set it up at the beginning of last year to have 10% go into this one, 20% into this one, 20% into this one, and so on and so on. While you have a whole year now worth of, again, market action that has again, probably skewed some of those percentages again. Again, if you’re looking at a straight breakdown, you may want to go back in and rebalance those. Again, looking at where things are in our economy right now, is that still where you want to be from a allocation standpoint to be able to again, feel comfortable and know what risk you’re taking on based off of the allocations that you’re looking at.
Again, as we turn into a new year, it also brings into effect some new changes that are going into effect starting January 1 of 2025. Most notably is if you inherited a retirement account, so a 401K, an IRA, a or Roth account, a 403B, and you are a non-spouse beneficiary, meaning again, husband didn’t inherit a wife that passed away, or a wife didn’t inherit a husband’s retirement account after they passed away. If you are a non-spouse beneficiary, a kid, an aunt, an uncle, a friend, anything along those lines, if you inherited those in the last couple of years, if you inherited it from 2020 till now, the rules were that you had 10 years to take that out of there. You were required to by the end of the 10th year to have everything out.
Up Until January 1st, 2025, there was no real legislation to say that you had to take something out each year, so you could defer it all to year 10. You could take a little bit in year one, a little bit in year five, and then the rest in year 10, however you wanted to break that down. Well, starting in 2025, if you are a non-spouse beneficiary of a retirement account, there is an amount that you have to take out each year. Whether you want it or not, you have to take out a little bit each year. Again, if you have those type of accounts after 2020, again, you’re going to want to look at that and understand the amount that you have to again, or you are going to get penalized for not taking that money out. Again, understanding those rule changes, how they apply to you, if they apply to you, and again, the amount that you need to do.
The other one is, again, savings. There’s a new rule as part of Secure 2.0 Act that says if you are age 60 to 63 and you are still working, that you are able to put in a little extra into any retirement account at your employer as far from a savings. Now, there’s usually a little catch-up from age 50 and above. This is an addition to that, where you can save a little bit more into those type of an account. So, if it applies to you, you’re able to save a little bit more. Again, you want to take advantage of that if you’re able to.
Again, that’s a lot of stuff to … Again, new year, new things, new planning, but again, it’s things that you want to keep up with. Again, throughout the year, we’ll dive into a couple more of those a little bit more specifically on a given show, but again, as we get to the new year, want to make people aware of those and some of those new rules that are out there.
Again, we’re into 2025. A lot of the planning for 2024 is done, whether it’s Roth conversions, had a 12/31 deadline that we’ve always talked about. There is still a little bit of planning that you can do for 2024 and mainly due to you can still make contributions to any IRA or Roth account up until the tax deadline. Again, if you are eligible to make IRA or Roth contributions and you have not yet maxed out your 2024 contribution limit, you still have up until the tax deadline to make those contributions and have it be for a prior year.
Again, something to keep in mind as you look at where you probably are going to fall. You start getting those tax documents in, and maybe you have a little more income than what you thought, a little less income than what you thought, you’re going to get a bigger refund back, have to pay in. How can we adjust that? Again, if you’re eligible, you have up until the tax deadline to make those contributions. Again, and you want to do those before you file your return, especially if you’re putting those into a pre-tax IRA bucket because that will change your return. If you’ve already filed, you decide to go back and make a contribution for 2024 before the tax deadline, you’re going to have to file an amendment. Again, that’s not easy for anybody, so, again, make those before you file your taxes.
Again, any questions, give us a call. I did want to mention before I run out of time here that every Friday, NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of January will be donated to you the Low Moor Volunteer Fire Department. Again, I appreciate you tuning in today. This is Nate Kreinbrink with NelsonCorp Wealth Management bringing you this week’s financial focus. Thanks for tuning in and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in the show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer member of FINRA, SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.