Tag Archives: 401k

New 2023 Contribution Limits, 401k, IRA, Roth, SEP

Once again not surprising with the afore mentioned COLA adjustment on Social Security…. Retirement contribution limits were also adjusted by a large amount….

We find ourselves reviewing this amount so frequently and getting confused as the calendar turns as well as being in the next tax year but making contributions for the prior…. we are going to have a special tab here on our blog moving forward that will have two years data. The IRS Release.

So here we go!

Retirement Contribution Limits

  • 401(k), 403(b), most 457 plans, increased to $22,500 (2023), up from $20,500 (2022)
  • Catch up for those over 50 is increased to $7,500 (2023), up from $6,500 (2022)
  • Total max 401(k), 403(b), most 457 plans including catch up is $30,000 (2023) up from $27,000 (2022)
  • limit on annual contributions to an IRA increased to $6,500 (2023), up from $6,000 (2022)
  • IRA catch up for those age 50 and greater remains $1000
  • Annual Gift Exclusion amount increased to $17,000 (2023) from $16,000 (2022)

This takes care of the great majority of retirement plans…but for the record we do not like the formatting and will wait to post the new page once a more comprehensive and better formatted list is completed….

Have a “Fresh of the Presses IRS Retirement Increased Limit” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Great Time of the Year to Check Run Rate of Contributions to Retirement Plans or the Like

With a pending holiday week coming up in the next several and as mentioned before many on Wall Street seem to be getting their kids back to school. We thought it a timely time to remind everyone to check those retirement contribution run rates….


Great time to review your contribution levels

Midway through the third-quarter, is a good time for all of us to review our retirement contribution levels. If our intent is to max out your 401(k), or other retirement plan, take a peek and see if you’re on track to achieve this goal.



If you have any questions certainly shoot us your latest paycheck and we can do the calculations, but here are roughly where we should be on our contributions to the regular and ketchup 401(k) levels.


Ideally your year to date (YTD) contribution levels for your 401(k) regular withholding by yourself should be about $13,500 in order to meet the $20,500 regular filing maximum by the end of the year and if our goal is to achieve the $27K catchup for those 50 and older we should be at about the $18,000 level today. Both of these should be our individual YTD withholding amounts. We know there are matching and employer contributions … but the rules are set for us as an individual at the $19,500 regular maximum and $27,000 catch-up maximum.

Two quick reminders… if you have changed employers it is our job to keep up with the maximum amounts as mentioned here because our new employer will not know our prior contributions… Lastly we like to max fund early our contributions if we know we are not going to be at our employer the full year…. Especially if we may be going to another place that may not have a plan or may have a mandatory waiting period..

There are variances in certain situations, most of which we have already discussed, but those that we have not recently …

  This is your friendly reminder!

Have a Great “Retirement Run Rate” Reminder Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Q2 2022 J.K. Financial, Inc. Newsletter … Video Audio Podcast Review ! By John Kvale CFA, CFP

Welcome to our Video and Audio Podcast Review of our Q2 2022 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

BREAK IN – We are trying a new format of articles that are shorter, and hit a very wide variety of topics that should interest all ages and chapters…. Let us know what you think?

Click the Download button below, for a direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

Let’s get going! We hope you enjoy!

Q 2 2022 Newsletter

(YouTube)

All about the Stimulus Base Effects and the Coming Comparable (Hurdles)

In our main article, a somewhat follow up article to our Q 1 2022 Newsletter Main Article “Anatomy of a Slowdown” we review the base effects we as an economy are about to have to hurdle.

Sale of many companies exploded higher, similar to the one below, but now must be digested..

Look Back Tax Savings – Spousal IRA – SEP – HSA  , These can be done before your filing due date of April 18 to Possible Lower Your 2021 Taxes 

With tax season officially underway, actually nearing an end, the official filing date for non-extension regular Form 1040 Filers is April 18th, 2022 (this year) for year 2021 tax filings, just a few weeks out. There are a few tax saving ideas that even with the turn of the calendar can be implemented to possibly help last year’s income taxes. 

Self Employed Pension plan-the SEP as it’s commonly called is a great vehicle to offset income that is not of the W2 type, think consulting income.

The Spousal “Qualified IRA” is another handy tool to use if one of the spouses does not have any form of a retirement plan.

The HSA. One of the great parts of the HSA is you only need a high-deductible health insurance plan

Estate and Gift Planning Update – Annual Gifting Amount – Estate Tax Update 

Annual Gift amount upped to $16k per person

Estate Tax Stands at $12.06 million per person or $22.12 million per couple

“Last year certainly garnered many headlines of possible changes in much of the estate tax laws. In all fairness we fielded many questions and thankfully once again stuck to our mantra of until it is law, one should be very careful at making preemptive adjustments. There certainly can be changes in the future, but again short of knee jerk reactions, we tend to like for law mandates to be made for reaction, rather than rumors. “

Financial Planning/Retirement Planning Trick for those Early in the Workforce – Roth contribution for young working

Helping a new worker contribute to a Roth and an early age to jumpstart a retirement program…

From the Article…

“Most likely if a young worker is making a very nominal amount, and possibly still living at home, they will not have the cash flow to contribute to any type of retirement plan. But if someway somehow they can make a Roth contribution at least up to their earnings at a very young age the long term positive consequences of this can obviously be fantastic.”

“If a 17 year old was somehow able to get $6000 in a Roth (one time!) and earn 8% a year at age 66 he/she would have about $191,000. If that same 17 year old were somehow able to get $6000 a year until he or she was 23, (five years), and had the same 8% compounding until he or she was 66 there would be a nest egg of just under $1,000,000. That $1,000,000 would not be subject under current tax laws, to mandatory required minimum distributions (RMS;s) nor again under current tax laws would it be taxable income upon distribution.”

We hope you enjoy … talk to you in the summer!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

Back to Basics Fun Educational Review – Part Four – Retirement Planning … The Key – Start Early!

Welcome back to Part Four of our “Back to Basics” series .. we hope you’ve enjoyed the First Three which started with all about “The Emergency Fund” in Part 1 … with Part 2 being  “Protection Planning” and Part 3 discussing All about Debt Planning or “The Good the Bad and the Ugly of Debt” and now we happily bring you Part 4 Retirement Planning!

As a reminder this is a high level Financial Planning Education like overview starting with the basics of and we will continue into advanced topics in order of Planning Importance.  

Retirement Planning

The most important parts of retirement planning are very easy and as follows:

  1. Start Early
  2. Save as much as you can especially when you are young as compounding is your friend, do not worry about the amount, just save!
  3. Don’t overthink your investment options, just allocate as available and save save save…

Starting out with a healthy savings percentage of our earnings at an early age will lead to eventual maxing out of your retirement plans, forcing you happily into other savings vehicles thereby balancing your eventual portfolio with pre-tax retirement savings and after tax buckets of investments.

Continued high percentage earnings savings will also ultimately create the habits of not living on all that you are earning. This is especially important as we get closer to retirement and create just darn good habits.

There will likely be times in our lives when we may not be able to save as much on a percentage of our earnings as we would like, but constant top of mind savings habits will garner success in the long term, don’t let life’s curve balls distract your long term savings effort, you can do it!

Early savings should be very aggressive as the corpus of your savings are the actual savings component.  All equity type of investments especially during the first 5-10 years are not out of the realm of possibilities, again your continued contributions dominate the investment during these early stages.  As your retirement savings and for that matter other investments grow in size adjustments are necessary especially as we near retirement.

While there are talks of optimal retirement allocations, it’s not unusual to find inferior investment options in retirement accounts. Not to worry, don’t throw your employer or your plan under the bus … the most important item in your retirement savings program is the actual deferral of your hard earned work and the broad allocation! Be aggressive in the beginning and slowing down the allocation as it matures in size and our chapter nears retirement.

Weather 401, IRA, Sep- (Simplified Employee Pension), Roth.403b. 401A or any other retirement vehicle, the vehicle is not as important as participation!.

We will help you optimize from a tax standpoint which vehicle is best. and of course with the allocations as well!

Have a Great “Retirement Planning” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Q1 2022 J.K. Financial, Inc. Newsletter … Video Audio Podcast Review ! By John Kvale CFA, CFP

Welcome to our Video and Audio Podcast Review of our Q1 2022 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

Click the Download button below, for a direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

Let’s get going! We hope you enjoy!

Q 1 2022 Newsletter

(YouTube)

Anatomy of a Slowdown/Recession

In our main article, we review the last three drawdowns/slowdowns/recession for examples of how fast they occurred and the extremely fast recovery as can be seen by the main graph below.

We are not calling for a major slowdown/recession or the like, but we wanted to remind ourselves as well as everyone else, the last three drawdowns were not normal.

Longer drawdowns are the norm, and in the Newsletter Article we also go deeper into the Great Financial Crisis of 07-09, which was also not normal… it was much larger and much longer than the normal.

The past decade and a half have had it’s scary moments, but they did not last very long and were quickly attacked by the FOMC (Federal Open Market Committee) to give support in the system, fortunately very successfully. This may not always be the case, hence a reminder of the Umbrella use during sun shining times!

New Retirement Contribution Maximums, Best Practice, Tips and Tricks

The new retirement maximums are out at the IRS Website .

Again in our Newsletter article we remind those of smooth contributions throughout the year, UNLESS you have knowledge that may have you severed from your 401k some time during the year, in which a neat trick is to accelerate you contribution level in order to max that 401k out before you leave!

IRAs2022202120202019
401(k), 403(b), Profit-Sharing Plans, etc.2022202120202019
Annual Compensation305,000290,000285,000280,000
Elective Deferrals20,50019,50019,50019,000
Catch-up Contributions6,5006,5006,5006,000
Defined Contribution Limits61,00058,00057,00056,000
IRA Contribution Limit$6,000$6,000$6,000$6,000
IRA Catch-Up Contributions1,0001,0001,0001,000
Traditional IRA AGI Deduction Phase-out Starting at2022202120202019
Joint Return109,000105,000104,000103,000
Single or Head of Household68,00066,00065,00064,000
SEP2022202120202019
SEP Minimum Compensation650650600600
SEP Maximum Contribution61,00058,00057,00056,000
SEP Maximum Compensation305,000290,000285,000280,00

We hope you enjoy … talk to you in 2022!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

401k Plans Year 2022 Limits ($20,500 + $6,500 Catch Up), IRA Stay Same ($6,000 + $1,000 Catch Up) … Hmmm?

Great News for corporate and similar retirement plans as we get a 5% (actually 5.13%) bump in contribution limits…yay

Not sure what happened to the cost of living adjustments (COLA) for regular IRA’s, Roth’s and our catch up provisions as they are stuck once again at the same levels? Maybe they are only going to increase them every four years which puts an increase next year? Maybe they (IRS) does not want to confuse us? Either way, here are the updated rules from the IRS latest release for year 2022 !

The following from this IRS.GOV announcement and hot links are live back to the IRS website if you have deeper questions on each subject!

Deferral limits for 401(k) plans 

The limit on employee elective deferrals (for traditional and safe harbor plans) is:

  • $20,500 in 2022 ($19,500 in 2021 and 2020; and $19,000 in 2019), subject to cost-of-living adjustments

Catch-up contributions for those age 50 and over

If permitted by the 401(k) plan, participants age 50 or over at the end of the calendar year can also make catch-up contributions. You may contribute additional elective salary deferrals of:

  • $6,500 in 2022, 2021 and 2020 and $6,000 in 2019 – 2015 to traditional and safe harbor 401(k) plans

Deferral limits for IRA Roth 

For 2022, 2021, 2020 and 2019, the total contributions you make each year to all of your traditional IRAs  and Roth IRAs can’t be more than:

  • $6,000 ($7,000 if you’re age 50 or older), or
  • If less, your taxable compensation for the year

Traditional IRAs

  • Retirement plan at work: Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels.
  • No retirement plan at work: Your deduction is allowed in full if you (and your spouse, if you are married) aren’t covered by a retirement plan at work.

These charts show the income range in which your deduction may be disallowed if you or your spouse participates in a retirement plan at work:

2022

2021

Roth IRAs

This table shows whether your contribution to a Roth IRA is affected by the amount of your modified AGI as computed for Roth IRA purpose.

If your filing status is…And your modified AGI is…Then you can contribute…
married filing jointly or qualifying widow(er)< $204,000up to the limit
singlehead of household, or married filing separately and you did not live with your spouse at any time during the year< $129,000up to the limit

Have a Great “Year 2022 Retirement Limits Update” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

June 2021 Financial Planning and Capital Market Review – By John Kvale

Hello and Welcome to our June 2021 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

BREAK IN – HOLIDAY PARTY NOVEMBER 20 FROM 3-5 AT DALLAS ATHLETIC CLUB

Hope you enjoy!

June 2021 Video

YouTube

Financial Planning Tip(s)

Why Not to Overfund a Retirement Plan

In this updated post from a few years ago, we remind how easily it is to overfund a 401k plan and why, while it is not the end of the world, it is not a good tax situation….

Should you accidentally over fund your retirement plan … what occurs is a double taxation!

  1. You do not get the deduction for the contribution
  2. You will likely pay taxes on the eventual distribution

Job change is the most likely reason for overfunding!

Pesky Late Arriving Tax Form Reminder – Form 5498

In this mid month post we remind those of an extra late arriving tax form….

Murphy’s law being applied, the form just arrived last week….about two weeks after our post…..

Reason for receipt:

  • Rollover of a 401k or the like to an IRA – Most frequent
  • Contribution to an IRA
  • Contribution to a SEP

One of the most confusing parts of this form is that even though you may have made a qualified contribution for a prior year i.e. 2020, if you made that contribution in 2021, depending on the type of contribution the Form 5498 MAY show your contribution in year 2021.

Capital Market Comments

Inflation or No Inflation

In this part two post, “The Smartest Guys in the Room” post we discussed via interest rate futures graphs the movement after FOMC dot plot adjustments and the interest rate markets….

This is an updated Graph of the 2 year US Treasury, which is holding lower, (higher yield) possibly due to faster expected rate increases!

This is the ultra long 30 Year Treasury, which continues to trend higher (lower Yield) possible pricing less inflation from the above mentioned expected shorter term rate increases!

Ok…that’s a wrap for the June review…. Hello July!

Have a Great Day, Talk to You at the End of July!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Why You Do Not Want to Overfund Your 401k or Other Retirement Plan and How it Can Happen !

The most common type of Retirement Plan, the 401k in 2021 has a maximum deferral amount of $19,500 with a catch up provision for those age 50 or greater of $6.500 for a total of $26,000 again in year 2021.

Why You Do Not Want to Overfund Your Retirement Plan

Should you accidentally over fund your retirement plan … what occurs is a double taxation!

  1. You do not get the deduction for the contribution
  2. You will likely pay taxes on the eventual distribution

This is not the end of the world, especially if a very small dollar amount, but you still do not want this to happen…

How Does Overfunding a 401k Occur ? – Job Change

While it may seem puzzling at first, upon second thought the most common reason for overfunding a retirement plan is a job change.

It is impossible for your new employer to know your prior contributions, so an accidental overzealous withholding that throws you over the annual maximum will not be allowed from a IRS tax standpoint.

If you change jobs mid year, be sure to carefully determine your prior withholdings and monitor you new withholdings throughout the year as the burden is on us the employee to keep ourselves in check with the maximum.

For those gainfully employed at the same employer we have not seen an accidental over allowance in a very long time, so most employers have systems set up to automatically stop your contribution once the maximum is achieved. Should your employer merge with another company or change administrators, it is a good idea to make sure they pick up your prior contributions, which can be achieved by checking your paycheck’s ytd retirement plan withholdings after the change.

The good news is there are ways in certain cases to unwind this overpayment, but they are frequently very complicated, may create a tax issue for the IRS to review, and in some cases just not available.

Have a Great “No Overfunded 401k” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Confusing Tax Form 5498 Coming to Your Mailbox if any Qualified/IRA Activities

So we all trudged through the two decades of changed tax laws, and for the most part put them behind us … at least until extension filing deadline for some….

Just as we are forgetting about Forms, notifications, and tax documents, here comes one more!

Not to worry!

Form 5498 Reminder2019 Form 5498

The late arriving Tax Form 5498 can be confusing as it arrives seemingly late, but not to worry, its’ purpose is settlement …. Here at the Form 5498 IRS website it is noted as “An Info Copy Only” meaning this form is for our information only and no action is required.

So why does this form arrive so late?

Form 5498 captures movement into IRA/Qualified accounts and since we can contribute to IRA’s until the filing date of this year, they have chosen to have the form reported to them AFTER the regular April filing date to capture as many as possible this year contributions for last year….

Getting into the weeds for a moment as an example, if you roll over a 401k into your IRA Rollover… a Form 5498 will find its way to your mailbox …. not to worry, this seemingly late form settles up with the IRS in crazy accurate fashion one year later…showing them that you did NOT take the funds personally and absolving you of any tax burden.

Bottom line – This seemingly alarmingly late form needs to be tossed in your 2019 Tax File and kept for this years taxes, when we file in April of 2020!

Have a Great “No Alarming Tax Form” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Q 2 2019 Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 2 2019 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

Click Here for direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

Let’s get going!

 Q 2 2019 Newsletter

And here is your review!

Capital Market Talk

Recession and the Inverted Yield Curve

Ask any long distant runner what happens when they start out too fast and they will tell you it is not good new – The saying goes for every minute you go out too fast, you come back two minutes slower than normal…

In our main capital market article we discuss the reasons why we may have a recession by definition, but why it may not be a big deal (hopefully).

The Inverted Yield Curve (Short term interest rates higher than long term rates) and infrequent event, did occur for five days – so far – just after our Newsletter went to the publisher. The Inversion has been a good signal of recession, EVENTUALLY – some times as long as two years in advance.

They Don’t Want Your old 401k

A recent Cerulli study finds that once you leave the company, most really do not want your funds anymore. We have long suspected this.

  1. Frequently a short wait time turns into a long wait time with a different and much more general help line.
  2. Forms may be much more difficult to acquire.
  3. Paper work received, saying take it or we will distribute it and you will have taxes and penalties.
  4. Rolling over into an account that is TERRIBLY hard to get out and has hurdles to jump through, high monthly service charges as well as limited investments, if any.
  5. A general feel of everything is hard to do, once again explaining the Cerulli study results.

Are a few items we have run into over the years!

Iron Clad Trustee

General order of Trustee or other important people to execute your wishes when you are incapacitated or deceased, generally go like this:

  • Spouse
  • Sibling
  • CLOSE friend
  • Similar Aged Relative
  • Grown Children

As we can all imagine, this list can easily be very short and insufficient.

In our deep dive of the Institutional Trustee Services, we discuss the handiness of having such a great service as well as the ability to offer these services ourselves.

Choose Your Beneficiaries Carefully

In this article that fit nicely with our Trustee article we mention different types of Beneficiaries and most importantly. Make sure you confirm that your beneficiaries are correct as this will over ride you other documents, including a Will or Trust.

We hope you enjoy … talk to you in the Summer!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com