MONTGOMERY COUNTY — While some people are scrambling to finish up their holiday shopping, money experts say it’s very helpful to tidy up finances before the end of the year.
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News Center 7′s Nick Foley has a few tax-related tips to keep in mind before the clock hits midnight on Dec. 31.
While the 2023 tax deadline is months away, it’s important to make sure you take advantage of the existing loopholes.
One of the biggest opportunities is making Roth conversions from your 401k.
Shon Anderson of Anderson Financial Strategies said it’s all about moving as many tax-free dollars as you can from your 401k into your Roth IRA.
This way, the money can continue to grow tax-free before things change down the line.
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“If you find yourself in a lower tax bracket, which has been decreased since the tax cuts and Jobs Act, you can create income by converting some of those pretax dollars in your 401k in your IRA over to Roth and locking in that low tax bracket before they go back up and 2026,” Anderson said.
With those tax-free dollars in mind, be sure to max out your health savings account, especially when the average person will pay so much in later years on health expenses.
“If you’re in a high deductible health insurance plan, you have access to an HSA. That is one of the first places to put money with retirees spending hundreds of 1000s of dollars on average over their retirement in health expenses. That is a very tax-advantageous way to do it,” Anderson said.
Anderson also said this might be the time to sell losses from taxable accounts by the end of the year.
He recommends you reach out to a financial expert if you have any questions.
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