The stock market continues to defy expectations. In 2022, Wall Street predicted that rising rates would cause another down year and likely lead to a recession. Instead, corporate earnings have proven to be resilient, the jobs market is robust, and core inflation, despite volatile gas and food prices, is generally subsiding to normal levels. Stocks have done much better than many imagined.

So, how will 2024 unfold? We advise our clients to focus on what they can control. You cannot control the direction of the stock market. But by sticking to a well-constructed financial plan, you should be able to remove a lot of the stress from your decision-making. That’s the goal of today’s handy quarterly planning calendar.

October is Financial Planning Month

When the weather cools, it’s always a good time to focus on education — and learning how to secure your financial future. Mid-October is when the IRS typically announces changes to tax brackets, 401(k) plan contribution limits, estate and gift tax thresholds, and Social Security payouts. Last year’s adjustments to the tax brackets were the biggest in decades, but this year’s inflation-adjusted numbers are expected to be a less robust 5.4% — still, nearly double 2022’s increase of 3%.[1]

The federal income tax bracket in 2024 is expected to climb $37,450 for married couples. At the high end, the 37% bracket should kick in around $731,200 (couples) and $609,350 (unmarried individuals) next year.[2] Standard deductions likely will rise to $29,900 ($21,900 for heads of household).

Retirement plans

The maximum contribution amount for a traditional or Roth IRA is expected to increase to $7,000 for 2024, up from $6,500 in 2024, while a more generous increase for a 401(k) or similar employer-sponsored plan is expected to rise from $22,500 this year to $23,000 in 2024.

Beginning in 2026, catch-up contributions for workers aged 50+ in 401(k), 403(b), or governmental 457 plans and whose Social Security wages exceeded

$145,000, will have to be directed as Roth after-tax contributions. [3] Consider increasing your deferrals during your company’s open enrollment season.

Estate and gift taxes

Lifetime estate and gift-tax thresholds are likely to increase as well in 2024. Based on current inflation estimates, an individual’s federal lifetime estate-tax exclusion amount may increase from $12.92 million in 2023 to $13.66 million in 2024 (or more than $27 million for couples).

The annual limit on tax-free gifts is estimated to rise from $17,000 to $18,000 in 2024 and to $19,000 in 2025. This means you can increase gifts without tax implications. Remember, too, that you can also make a direct payment of these amounts on behalf of another person for medical expenses or tuition without counting any of these payments toward the annual gift exclusion or lifetime estate tax exclusion.

Social Security COLA

Social Security is likely to see an increase of around 3% in benefits payouts from mandated cost-of-living adjustments, down from 8.7% in 2023.[4] These estimated adjustments to your tax bracket, retirement plan contribution limits, and lifetime estate and gift tax exclusions could mean significant savings in your taxes in 2023 and 2024.

Now’s the time to put a plan in place to take advantage of all of these changes. An experienced financial advisor can help!

November: Insurance and end-of-year tax planning

At some point in our lives, about 60% of us will need some help with things like getting dressed, driving to appointments, or making meals.[5] But many folks don’t think they’ll ever have to consider the possibility of needing long-term care (LTC). Did you know that by 2050, it’s projected that at least 27 million Americans will need LTC? [6] Or that Alzheimer’s disease is the biggest contributor to the elderly needing LTC? Medicare only pays for the first 20 days of staying in a nursing home, and the average cost of a nursing care facility is $93,075 per year (semi-private room) and $105,850 (private room).

The sooner you begin planning for LTC insurance needs, the less expensive it could be.

November is also an excellent time to finalize your end-of-year tax planning strategy. Here’s a short list of items to consider:

·        Maximizing contributions to tax-deferred accounts [e.g., Traditional IRAs, 401(k), HSA, SIMPLE IRA, solo 401(k), SEPs]

·        Harvesting tax losses

·        Accelerating tax deductions into 2023 (if you itemize)

·        Minimizing Net Investment Income Tax (NIIT)

·        If your income has been lower than usual this year, you may want to look at deferring deductions, rebalancing your portfolio, reviewing your tax withholding, and/or weighing the benefits of a Roth conversion

December: Gifting/giving to charity

You may want to share your good fortune with the people and causes you care about. Giving cash is your simplest option. However, if you are giving to family members, you need to consider tax implications. Lifetime exemptions are higher than they have ever been, but if future tax laws reduce that exemption amount, it could affect your gifting plans.

•  Charity gifts. You can give cash to charities and still claim a deduction. You also have the option to gift appreciated securities that may have some embedded long-term cap gains. You can donate these shares to a non-profit and you and the charity will both avoid paying a capital gains tax. But if you are thinking about gifting stocks that have lost money, it might be smarter to sell them and donate the cash. Make sure you submit your donation requests in writing at least a week before year-end so that they can be processed!

• Donor Advised Fund (DAF). A DAF is a good option if you know you want to give to a 501(c)(3) charity, but aren’t sure which one, or want to make a gift anonymously. You get an immediate tax deduction for any assets you transfer to the fund, and you free your estate of any cap gains those assets have accumulated or will accumulate in the future.

This may seem like a long list. But you can pick just the items that have the most meaningful impact on your financial situation and save others for next year. And don’t forget that a full-service financial advisor can take on many of the tasks that you don’t have the time or inclination to do yourself.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

The original article was published by Pioneer Press.

By Bruce Helmer and Peg Webb, Financial Advisors at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO AM 830 on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Securities are offered through LPL Financial, member FINRA/SIPC. Advisory services are offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.

[1] CPA Practice Advisor, “Projected 2024 Income Tax Brackets,” Sept. 13. 2023.

[2] Source: American Enterprise Institute, as quoted in The Wall Street Journal (9/15/2022)

[3] “IRS announces administrative transition period for new Roth catch-up requirement; catch-up contributions still permitted after 2023,” IRS.gov, Aug. 25, 2023. (Guidance for section 603 of the SECURE 2.0 Act included in Notice 2023-62.)

[4] Source: AARP, based on analysis from Morningstar, the Center for Retirement Research at Boston College, and ethe Urban Institute’s Program on Retirement Policy. https://states.aarp.org/michigan/social-security-cola-2024-how-much-will-benefits-increase-next-year

[5] Source: U.S. Department of Health and Human Services, Administration for Community Living (ACL) website, as of 1/04/2021. https://acl.gov/ltc

[6] Source: “National Long-term Care Awareness Month, November 2023,” Nationaltoday.com