#1 Retirement plan contributions
You might be able to squeeze out a bit more cash from each paycheck as the year comes to a close for your retirement savings. A 401(k), 403(b), or federal Thrift Savings Plan will allow you to contribute up to $20,500 in 2022, plus $6,500 in catch-up contributions if you’re 50 years or older.
Find out as soon as possible how much you’re on track to contribute to your 401(k) before the end of the year and ask about the measures you need to take to increase your contributions by getting in touch with your 401(k) administrator or your employer’s human resources department. The sooner the adjustment is implemented, the better: Payroll deductions are used to make 401(k) contributions. You have until April 18th, 2023, to make an individual contribution to a regular or Roth IRA for 2022.
A year-end bonus can be a wonderful opportunity to increase your contributions without reducing your normal take-home pay if you aren’t on schedule to max out your retirement fund for the year.
Depending on the plan, participants may not be able to contribute their bonuses. Ensure that you stay under the annual contribution cap as well. You have until the deadline for submitting your taxes to remove any further contributions and earnings, which are both taxable. If you don’t take it out, you’ll have to pay the tax on the excess contribution now and again when you eventually withdraw the money.
