My City Wellness Winter 2022

ADVERTORIAL

SPICE UP YOUR SAVINGS FOR THE NEW YEAR

When we think about savings during the holiday season, most of us think about finding the best ways to save on our shopping sprees. But as the clock strikes midnight on 2021, here are a few other savings techniques you may want to include in your New Year’s Resolutions: R S A classic, for good reason. Compound interest is a powerful tool, so the sooner you start saving the better. If your employer o ers a 401(k) or other retirement plan, get on it—if they o er a matching contribution, it’s as close to free money as you’ll get. Even if the maximum annual contribution sounds daunting (2022: $20,500, plus $6,500 if you’re over age 50), at least contribute enough to meet your employer’s matching rate. I promise, you won’t notice it’s gone from your paycheck, but you’ll love watching your savings grow. No 401(k)? Open either a Traditional or Roth IRA—you can still sock away up to $6,000/year ($7,000 for ages 50+). You still have until this year’s tax deadline to make your IRA contributions for 2021. T S I T If you have extra cash built up, but don’t necessarily want to lock it up until retirement, consider opening a taxable investment account as a medium-to-long term savings or an emergency fund. Your investments will still reap the bene ts of compound interest and you will have the exibility to withdraw money anytime you need it. Note that capital gains taxes do come into play here.

E S It is never too early to start saving for education for your loved one. A few ways to get started: 529 Plan: Gi your education savings and allow it to grow tax-free (as long as it’s used for education expenses). You can fully cover college tuition or use up to $10,000/ year on K-12 education costs. Any amount le over can be rolled to another bene ciary, like a sibling or grandchild. In Michigan you can also deduct up to $5,000/year in contributions if you use an in-state plan. UTMA/UGMA: Similar to a taxable investment account, these are considered “gi ” accounts you can open on behalf of a minor. Withdrawals are allowed to be made at anytime, for any reason, if they are for the bene t of the child. Once the bene ciary becomes “majority age,” however, the money is considered theirs to use at their discretion. Coverdell Education Savings Accounts (ESA): A blend of the rst two plans, you can contribute up to $2,000/year to a child on a tax-deferred basis—if the proceeds are used for education, they are also tax- free; otherwise, the growth is taxed and penalized 10%. Once the bene ciary turns 18, they are legally the account owner, and the funds must be used by age 30 (or rolled to another bene ciary). T S Donate (Money or Time) to Charity If you have the resources to give back monetarily, make sure you also get credit for doing so with the IRS by itemizing your donations come tax time (if you’re over the standard deduction, that is). ese deductions come o your taxable income and reduce your tax bill.

Jessie Stirling Investment Analyst Wealth Advisor Stephens Wealth Management Group

Consider a Roth Conversion If you’ve been thinking about converting your Traditional retirement savings to a Roth, now may be the time. With historically low tax rates and the “back-door” Roth contribution both teasing an end, it may be in your best interest to pay some taxes by converting your money now…as opposed to paying more in taxes on the same money, later. Take Advantage of Taxable Losses A less glamorous strategy, but if you have an unrealized taxable loss on an investment, it may be worth selling it to claim the loss on your taxes. You can use it to cancel out your gains for the year, or carry over up to $3,000/ year in losses until you break even. H S A If you have a high-deductible health insurance plan, you may be eligible for a Health Savings Account (HSA). HSAs are a triple tax bene t— your contributions are tax deductible, earnings grow tax-free, and withdrawals are also tax-free when used for quali ed medical expenses. HSA contributions are limited to $3,600/year for individuals or $7,200 for family plans. With these savings tools in your back pocket, you can be sure to start o 2022 right! ®

Investment advisory services offered through Stephens Consulting, LLC, a SEC registered investment adviser doing business as Stephens Wealth Management Group (SWMG). SWMG is not a registered broker/dealer. SWMG investment adviser representatives may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. SWMG is neither a law firm nor a certified public accounting firm and no portion of this article should be construed as legal or accounting advice. Past performance may not be indicative of future results. This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Contact our office for information and availability. SWMG, 5206 Gateway Centre, Suite 300, Flint, MI 48507 ph: 810.732.7411.