As another year draws to a close, your retirement is one step closer. But there’s still time to take action before December 31 to strengthen your retirement savings and secure valuable tax benefits. Here are five strategies to consider:

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1. Establish Your 2024 Retirement Plan

If you don’t already have a retirement plan in place for yourself or your business, now is the time to act. Setting up a qualified plan—such as a 401(k), SEP, or SIMPLE IRA—allows you to take advantage of significant tax deductions for 2024.

For owner-employees, you can contribute as both the employer and employee, enabling higher contributions. This dual role offers an excellent opportunity to boost your retirement savings while reducing taxable income.

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2. Leverage the Enhanced Start-Up Tax Credit

The SECURE 2.0 Act has increased the tax credit for establishing a new retirement plan. You may qualify for a credit of up to $15,000, calculated as follows:

• Base credit: $500, or

• Higher credit: $250 per eligible non-highly compensated employee (up to $5,000).

These credits help offset the costs of establishing and managing your plan, including employee education expenses.

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3. Maximize Employer Contribution Tax Credits

The SECURE 2.0 Act also offers an additional tax credit of up to $1,000 per employee for your contributions to their retirement plans.

• Year 1: 100% of contributions (up to $1,000 per employee).

• Year 2: 100% of contributions.

• Gradual phase-out begins in Year 3, with no credit after Year 5.

If you have 50 or fewer employees, this credit can significantly reduce the cost of employer contributions.

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4. Claim the Automatic-Enrollment Tax Credit

Adding automatic enrollment to your retirement plan can earn you a $500 credit per year for up to three years. This feature simplifies participation for employees while providing an extra financial incentive for your business.

Even if you already have a retirement plan in place, adding automatic enrollment can qualify for this credit.

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5. Consider Converting to a Roth IRA

Converting your traditional IRA or 401(k) to a Roth IRA offers several compelling advantages:

• Tax-Free Withdrawals: Once converted, your earnings grow tax-free, and qualified withdrawals in retirement are completely tax-free.

• Flexibility: You can withdraw contributions at any time without taxes or penalties.

• No Required Minimum Distributions (RMDs): Roth IRAs don’t require RMDs, giving you full control over your savings for as long as you live.

• Legacy Planning: Roth IRAs allow your beneficiaries to enjoy tax-free earnings after your passing.

Evaluate the tax implications of the conversion to ensure you have the necessary cash to cover the associated taxes.

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Take Action Before Year-End

These strategies offer a mix of tax savings, retirement growth, and financial flexibility, but they require timely action.

Let’s work together to assess which options best align with your goals. Reach out to schedule a year-end review so we can solidify your retirement strategy and make the most of the opportunities available to you.

Here’s to a brighter financial future!