By Curtis W. Chambers, CFP®

Saving money is essential, and it’s the foundation of any financial plan. But it can be challenging to find money to save. Fortunately, there’s a way to make the process easier, and would you believe we have Congress to thank? I always say Congress did a great job when they invented the IRA and 401k! But that’s not all. There are Roth and Mega Roth conversions, HSAs, and even Donor-Advised Funds.

So, consider the following tax-reducing strategies to make the savings process more accessible and palatable. Sure, saving money may be challenging, but deciding between saving or paying more taxes is an easy choice. So, let’s save money in 2024!

While many people leave their tax planning to the professionals, it’s still important to know how to limit your tax liability on savings because you’ll have to make these moves before your taxes are due.

Here is a list of my top 5 tax-planning strategies to help you maximize your savings in 2024.

1. Optimize Your Retirement Savings Contributions

Did you know maximizing your retirement contributions is one of the best ways to minimize your tax liability? Qualified retirement plans like 401ks and IRAs offer valuable tax advantages that are not available if you were just to put your money in a regular account. There are several qualified plans to consider, depending on your situation:

2. Explore the Benefits of Roth Conversions

Suppose you are outside the income eligibility threshold for Roth IRAs but still want to take advantage of the Roth tax benefits. In this case, a Roth conversion may be a strategy to consider. It works by paying the income tax on your pre-tax traditional IRA and converting the funds to a Roth IRA. At the Chambers Financial Group, we utilize powerful software to locate Roth conversion opportunities.

You could also consider the mega backdoor Roth and backdoor Roth IRA strategies:

All three Roth conversion strategies will allow the contributions to grow completely tax-free and allow you to avoid future RMDs, which is helpful if you expect to be in a higher tax bracket in the future. 

3. Contribute to a Health Savings Account

An efficient but underutilized way to maximize your savings and minimize your taxes is to contribute to a health savings account (HSA). HSAs offer triple tax savings:

Unused funds roll over each year and will essentially become an IRA at age 65, at which point you can withdraw funds penalty-free for non-medical expenses. You must be enrolled in a high-deductible health plan to qualify for an HSA. 

HSAs can be a great tax-management tool if you can pay medical expenses out of pocket and leave the HSA funds to grow. The 2024 contribution limits for HSAs are $4,150 for individuals and $8,300 for families. If you are 55 or older, you may also be able to make catch-up contributions of $1,000 per year. You have until April 15th for your contributions to count for the previous year’s tax return. 

4. Invest in a Donor-Advised Fund

If you’re charitably inclined and itemize your tax deductions because of charitable contributions, consider investing in a donor-advised fund (DAF). You can contribute a lump sum all at once and then distribute those funds to various charities over several years. With this strategy, you can itemize deductions when you make the initial contribution and then take the standard deduction in the following years.

You can also donate appreciated stock, further maximizing your tax savings. By donating the appreciated position, you avoid paying the capital gain tax that would have been due upon the sale of the stock, and you are effectively donating more to your charities of choice than if you had sold the stock and donated the proceeds.

5. Contribute to a Charitable Cause With a Qualified Donation

If you own a qualified retirement account and are at least 70 1⁄2, you can use a qualified charitable distribution (QCD) to receive a tax benefit for your charitable giving. Since this is an above-the-line deduction, it can be used in conjunction with other charitable tax strategies. A QCD is a direct distribution from your retirement account to your charity of choice. It can also count toward your RMD when you turn age 73, but unlike RMDs, it won’t count toward your taxable income. Individuals can donate up to $100,000 in QCDs per year, which means a married couple can contribute a combined amount of $200,000!

Start Saving Today

The thought of tax planning may seem complicated or overwhelming. Working with a qualified and trusted advisor who has a wide range of tax experience can make all the difference. At Chambers Financial Group, we can help you navigate these strategies and more. Our goal is to provide professional and independent top-notch wealth management advice, education, and service to clients in Pinellas County and beyond. 

For current clients, you can schedule a tax review meeting. If you are not currently working with us and are ready to get started saving today, we would love to hear from you. Schedule an introductory appointment by reaching out to us at (727) 216-6280 or curtis.chambers@lpl.com.

About Curtis

Curtis Chambers is a financial advisor and founder of Chambers Financial Group, a financial services firm based in Largo, FL, that provides independent financial planning and investment advisory services through LPL Financial. For over two decades, Curtis has practiced values-based planning and investment management for families, retirees, and small businesses, centered on personalized advice and guidance based on customized goals. Curtis thrives off removing the money management burden from his clients’ shoulders and helping them make their money work for them—for a lifetime.

Curtis’s career as a financial advisor began in 1997 with Edward Jones, for which he managed the Clearwater office for 12 years. Curtis served in the Florida Army National Guard and has been quoted in The Wall Street Journal, NBC News, and Men’s Health magazine, among others. He serves on the Board of the Community Service Foundation in Clearwater, is the past President of St. Patrick School PTO, and is on the school’s Advisory Council. Curtis holds a Bachelor of Arts in English from the University of Arkansas, an MBA from the Olin Business School at Washington University in St. Louis, and holds the CERTIFIED FINANCIAL PLANNER™ designation. Curtis lives with his wife and sons in Largo and enjoys exercise, reading, and spending time with family. To learn more about Curtis, connect with him on LinkedIn.

Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. All performance reference is historical and no guarantee of future results. All indices are unmanaged and may not be invested into directly. 

All investing involves risk including loss of principal. No strategy assures success or protects against loss. The economic forecast set forth in this material may not develop as predicted, and there can be no guarantee the strategies promoted will be successful. Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. Approval: 544473-1

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