Jones & Roth CPAs & Business Advisors

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  • 2024 Retirement Plan Contribution Limits, Phase-Out Ranges, and Income Limits

    2024 Retirement Plan Contribution Limits, Phase-Out Ranges, and Income Limits

    The IRS has released 2024 inflation-adjusted contribution limits, phase-out ranges, and income limits for various retirement accounts. (IRS Notice 2023-75)

    Contribution Limits

    401(k), 403(b), and most 457 plans
    For 2024, the amount an individual can contribute to a 401(k), 403(b), and most 457 plans increases to $23,000, up from $22,500 in 2023. The catch-up contribution amount, for employees 50 and older who participate in these plans, remains at the 2023 level of $7,500 (Note: This means participants over 50 can contribute up to $30,500 to one of these plans. 

    IRAs
    For IRAs, the amount an individual can contribute increases to $7,000 (up from $6,500 in 2023). The catch-up contribution amount remains $1,000.

    SIMPLE IRAs
    The amount individuals can contribute to their SIMPLE accounts increases to $16,000 (up from $15,500 in 2023). The catch-up contribution limit for SIMPLE accounts contribution amount remains $3,500.

    Phase-out Ranges & Income Limits

    In addition, the IRS released new income phase-out ranges for making contributions to a traditional IRA and Roth IRA, as well as the income limit on claiming the Saver’s Credit.

    If either the taxpayer or their spouse is covered by a workplace retirement plan during the tax year, the maximum amount they can contribute to a traditional IRA may be reduced (phased out) to zero, depending on the taxpayer’s filing status and income (Note: If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-out rule doesn’t apply).

    The traditional IRA phase-out ranges for 2024 are:

    • For single taxpayers covered by a workplace retirement plan, the phase-out range begins at $77,000 and ends at $87,000 (up from $73,000 and $83,000 in 2023).
    • For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range increases to between $123,000 and $143,000 ($116,000 and $136,000 in 2023).
    • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range increases to between $230,000 and $240,000 ($218,000 and $228,000).
    • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

    The phase-out ranges for Roth IRAs are:

    • For singles and heads of household, the phase-out begins at $146,000 and ends at $161,000 (up from between $138,000 and $153,000 in 2023).
    • For married couples filing jointly, between $230,000 and $240,000 (up from between $218,000 and $228,000 in 2023).
    • For married couples filing separately between $0 and $10,000.

    The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) increases to:

    • $76,500 for married couples filing jointly, up from $73,000;
    • $57,375 for heads of household, up from $54,750; and
    • $38,250 for singles and married couples filing separately, up from $36,500.

    Download our 2024 Retirement Plan Limits (PDF)

  • 8 ways construction businesses can proactively manage their supply chains

    8 ways construction businesses can proactively manage their supply chains

    Both global and national supply chains received much attention during the pandemic. Slowdowns and choke points have become relatively less common since, but that hasn’t stopped “supply chain issues” from being a commonly heard refrain in the construction industry.

    As you’re no doubt aware, shortages or delays of materials and equipment can have devastating effects on project scheduling and progress. That’s why it’s critical for contractors to proactively manage their supply chains. Here are eight strategies to consider:

    1. Develop and maintain strong supplier relationships

    This is a good business practice in general but especially critical during challenging times. Reach out regularly and keep the lines of communication open so you’ll learn about potentially troublesome developments and have time to plan for shortages. Establish a strong payment history — including early payments, if possible — to nurture goodwill.

    2. Be transparent with customers

    Another way to build goodwill and head off discord is to inform project owners when you encounter difficulty procuring materials or equipment. Ideally, you should have already addressed the possibility of supply chain issues during bidding and preconstruction.

    3. Put an expiration date on your bids

    Keeping bids open for a relatively short period — for example, 30 days — can help protect you against unexpected shortages and price increases. You can always extend the time, provided you confirm the availability of materials and equipment.

    4. Negotiate contractual protections

    If possible, protect yourself by making start or completion dates contingent on delivery of materials and availability of equipment.

    5. Order in advance

    If you anticipate that materials or equipment will be hard to come by, consider ordering them in bulk ahead of time. Granted, doing so will affect your cash flow and could result in added costs (off-site storage, for instance).

    However, acting ahead might help you avoid sudden shortages while locking in current prices. Determine whether you can negotiate contracts that provide for early release of funds to make advance purchases when necessary.

    6. Diversify your “portfolio”

    Investors reduce risk by diversifying their portfolios. Similarly, construction companies can reduce their risks by diversifying their supply chains — that is, developing a mix of suppliers of different sizes and in different geographical regions.

    Doing so can mitigate the risk that comes from doing business with only one supplier or very few. If a natural disaster, political instability or economic factors disrupt a supplier’s ability to meet your needs, others can step in and minimize the negative impact.

    7. Have a Plan B (and C)

    Develop contingency plans in the event of materials or equipment shortages. For example, explore a relationship with another construction company in which you might be able to buy some of their stockpiled supplies or borrow equipment. Another idea is to investigate whether design changes may allow you to use more readily available materials or equipment.

    8. Consider supply chain management software

    Given the complexity and risks associated with today’s supply chains, look into using supply chain management software to automate and enhance the process. These solutions can help you evaluate suppliers, spot potential vulnerabilities, track shipments and even model “what if” scenarios to develop the contingency plans mentioned above.

    Before you buy such software, however, let us help you evaluate the costs vs. benefits. We can also assist your construction company in quantifying and analyzing its overall supply chain costs.

  • Financial Considerations & Tax Planning Opportunities for Small to Mid-Sized Businesses

    Financial Considerations & Tax Planning Opportunities for Small to Mid-Sized Businesses

    Business owners have to keep a number of tax planning and financial considerations on their radar, whether they are just starting out, managing growth, or preparing for an exit.

    In this webinar, Matt Adams, CFP®, CLU®, ChFC® and Jordan Dawley, CPA discuss financial considerations and tax planning opportunities for owners of small to mid-sized businesses, as they plan for the end of 2023 and beyond.

    About the Presenters

    Matt Adams, CFP®, CLU®, ChFC®
    Partner & Financial Advisor

    Matt specializes in comprehensive wealth management for individuals, families and business owners. This includes, but is not limited to, investment strategies, 401(k) and retirement plans, disability income insurance, life insurance, long-term care insurance, charitable gifting strategies, estate conservation, and business succession planning. Matt has over 25 years of experience in the financial services profession.

    Matt Adams is a Financial Advisor offering Securities through Avantax Investment ServicesSM, Member FINRA, SIPC, Investment Advisory services through Avantax Advisory ServicesSM, and Insurance services offered through an Avantax affiliated insurance agency. Jones & Roth and Avantax are unaffiliated.

    Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

    Jordan Dawley, CPA
    Senior Manager

    Jordan Dawley works at Jones & Roth as a Senior Manager. He specializes in providing tax planning and preparation for individuals and businesses, working closely with our dental and healthcare practice niches. He enjoys connecting with others in the local business community and providing solutions that have an impact on local companies and their owners. He currently serves as the Audit Chair of the local chapter of Risk Management Association.

    Jordan Dawley is a Financial Advisor offering Securities through Avantax Investment ServicesSM, Member FINRA, SIPC, Investment Advisory services through Avantax Advisory ServicesSM, and Insurance services offered through an Avantax affiliated insurance agency. Jones & Roth and Avantax are unaffiliated.

  • Beneficial Ownership Information Reporting Requirement under the Corporate Transparency Act

    Beneficial Ownership Information Reporting Requirement under the Corporate Transparency Act

    Starting January 1, 2024, a significant number of businesses will be required to comply with the Corporate Transparency Act (“CTA”). The CTA was enacted into law as part of the National Defense Act for Fiscal Year 2021. The CTA requires the disclosure of the beneficial ownership information (otherwise known as “BOI”) of certain entities from people who own or control a company.

    It is anticipated that 32.6 million businesses will be required to comply with this reporting requirement. The intent of the BOI reporting requirement is to help US law enforcement combat money laundering, the financing of terrorism, and other illicit activity.

    AICPA Beneficial Ownership Information FAQs (PDF)
    AICPA Beneficial Ownership Information FAQs (PDF)

    The CTA is not a part of the tax code. Instead, it is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. Under the CTA, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury.

    Below is some preliminary information for you to consider as you approach the implementation period for this new reporting requirement. This information is meant to be general-only and should not be applied to your specific facts and circumstances without consultation with competent legal counsel and/or other retained professional adviser.

    What entities are required to comply with the CTA’s BOI reporting requirement?

    Entities organized both in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements. Domestic companies required to report include corporations, limited liability companies (LLCs) or any similar entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe.

    Domestic entities that are not created by the filing of a document with a secretary of state or similar office are not required to report under the CTA.

    Foreign companies required to report under the CTA include corporations, LLCs or any similar entity that is formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or any similar office.

    Are there any exemptions from the filing requirements?

    There are 23 categories of exemptions. Included in the exemptions list are publicly traded companies, banks and credit unions, securities brokers/dealers, public accounting firms, tax-exempt entities and certain inactive entities, among others. Please note these are not blanket exemptions and many of these entities are already heavily regulated by the government and thus already disclose their BOI to a government authority.

    In addition, certain “large operating entities” are exempt from filing. To qualify for this exemption, the company must:

    1. Employ more than 20 people in the U.S.;
    2. Have reported gross revenue (or sales) of over $5M on the prior year’s tax return; and
    3. Be physically present in the U.S.

    Who is a beneficial owner?

    Any individual who, directly or indirectly, either:

    • Exercises “substantial control” over a reporting company, or
    • Owns or controls at least 25 percent of the ownership interests of a reporting company

    An individual has substantial control of a reporting company if they direct, determine or exercise substantial influence over important decisions of the reporting company. This includes any senior officers of the reporting company, regardless of formal title or if they have no ownership interest in the reporting company.

    The detailed CTA regulations define the terms “substantial control” and “ownership interest” further.

    When must companies file?

    There are different filing timeframes depending on when an entity is registered/formed or if there is a change to the beneficial owner’s information.

    • New entities (created/registered after 12/31/23) — must file within 30 days
      • There is proposed rulemaking allowing for new entities created in 2024 only to extend the 30-day timeframe to 90 days.
    • Existing entities (created/registered before 1/1/24) — must file by 1/1/25
    • Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports — must file within 30 days

    What sort of information is required to be reported?

    Companies must report the following information: full name of the reporting company, any trade name or doing business as (DBA) name, business address, state or Tribal jurisdiction of formation, and an IRS taxpayer identification number (TIN).

    Additionally, information on the beneficial owners of the entity and for newly created entities, the company applicants of the entity is required. This information includes — name, birthdate, address, and unique identifying number and issuing jurisdiction from an acceptable identification document (e.g., a driver’s license or passport) and an image of such document.

    Risk of non-compliance

    Penalties for willfully not complying with the BOI reporting requirement can result in criminal and civil penalties of $500 per day and up to $10,000 with up to two years of jail time. For more information about the CTA, visit www.aicpa-cima.com/boi.

    Please contact our office to discuss your business situation.

  • Watch the replay: Live Q&A Session – 2023 Filing Update for Forms 1099

    Watch the replay: Live Q&A Session – 2023 Filing Update for Forms 1099

    This live Q&A session is for small businesses preparing to report payments on Forms 1099 early next year, who have already watched our Forms 1099 Video Tutorial Series, and who want to get answers to questions from our Small Business Team.  It’s important for small businesses to stay up-to-date with the revisions to Forms 1099 and the related rule changes, as well as:

    • Payments that include both goods and services 
    • Rentals of personal property vs rentals of real property 
    • Payments to Health Care Professionals and Medical Service Providers 
    • Attorney and Settlement payments  
    • Non-qualified deferred compensation payments 
    • Classifying whether something is reportable or not, and which Form 1099 to use 
    • Identifying the reportable payee when paying sole proprietors, LLCs, payees merged or bought by another, S-Corps, agents, or middlemen  
    • Receiving backup withholding  
    • W-9 document validation and IRS TIN Match Program 
    • Handling payees with a missing tax identification number (TIN) 
    • Exempt organization payees 
    • Combined Federal/State Filing Program 
    • E-Filing 
    • and more! 
    Image with information about Jim Wyatt and Jenny Odintz

    About the Presenters

    Jim Wyatt, Jones & Roth Business Advisor
    Jim is a Consultant with over 30 years of business and consulting experience across several business sectors, including manufacturing, retail, and agriculture.

    Jenny Odintz, Jones & Roth Business Advisor
    Jenny joined the Jones & Roth team in 2019. She brings a specialized accounting and bookkeeping expertise to the firm’s small business services group


  • Jones & Roth CPAs and Business Advisors named one of the Best CPA Firms for Leadership Equity by Accounting & Financial Women’s Alliance

    Jones & Roth CPAs and Business Advisors named one of the Best CPA Firms for Leadership Equity by Accounting & Financial Women’s Alliance

    Eugene, Oregon (November, 2023) – Jones & Roth CPAs and Business Advisors was named to the 2023 Accounting MOVE Project as a Best Firm for Leadership Equity for the sixth consecutive year, based on the firm’s 43% of women participating in Partner roles. Jones & Roth boasts a longstanding and authentic commitment to women by offering individualized career paths, reducing charge hours, and ensuring that professional and personal goals align. The firm’s changes have brought momentum, and its talent base is currently comprised of more than 60% women.

    “We are excited to see firms embrace radical flexibility so women can create their own career path instead of being forced to stick to a rigid, and outdated, progression,” said Cindy Beets, Global Head of Marketing, SAPRO. “It is also encouraging to see so many firms introducing and expanding holistic well-being offerings so women can take care of themselves – as well as others – no matter where they are in their career journey.”

    “When options abound, women want to work for firms that appreciate their talents and give them opportunities to advance at a pace that fits with the rest of their lives. That’s why programs like the Accounting MOVE Project are so important to identify firms that have a history of women in leadership and offer flexible career options,” said Cindy Stanley, Executive Director of the Accounting and Financial Women’s Alliance.

    Tricia Duncan, CPA, Partner & Director of Operations at Jones & Roth relayed, “Jones & Roth has focused on helping each team member find the career path that fits their professional and personal goals.  This individualized approach provides flexibility and support to team members as they move through their career and this has helped Jones & Roth to increase the number of women in leadership positions and creates a culture of inclusiveness for all team members.”

    [Podcast Episode] Listen to “Robin Matthews of Jones & Roth Joins the MOVE Conversation”

    About Jones & Roth CPAs and Business Advisors

    Jones & Roth CPAs and Business Advisors is one of the largest CPA firms headquartered in Oregon. The firm serves companies, nonprofits, and individuals from offices in Eugene, Hillsboro, and Bend Oregon.

    Jones & Roth professionals are devoted to specialized practice and industry areas and provide high-value consulting and advisory services. Other services include accounting & payroll, audit & assurance, estate & trust, retirement plan services, retirement plan audit, tax, and financial advisory services.

    Jones & Roth has been named as one of the Oregonian’s Top Workplaces, Oregon Business’ Best Companies to Work For, and named as an IPA Top 300 Firm.

  • Understanding Equity Compensation

    Understanding Equity Compensation

    Employers do what they can to foster a sense of ownership in their employees. After all, if you stand to benefit from a company’s success, you’re more likely to do a great job for them, or so the logic goes.

    So, when you are hired for a job or promoted within your existing company, you might be offered some sort of ownership benefit. You might even get to decide whether to take all of your pay in cash or to use some of your pay to purchase equity in the company.

    At first glance, the answer might seem simple: Show me the money! However, there are situations in which an equity position may make more financial sense. Finding that line is key to getting the most compensation from your career.

    What do you need to know, then, to ask the right questions?

    In some cases, employees have the choice to buy company stock in a tax-deferred retirement plan sponsored by their employer, the most common of which is the 401(k). In other instances, there may be other ways to buy into ownership.

    Why is a retirement plan choice important? Well, the point of these retirement accounts is that you’re not paying tax on money today but rather at some point in the future when you take a distribution. If you are taking a distribution from the sale of stocks in your 401(k), you may have the choice of treating the appreciated securities as ordinary income or using the net unrealized appreciation (NUA) tax treatment.

    It’s critical to point out that the NUA choice only works when you buy stocks that are kept in your workplace retirement account. The NUA election isn’t available for other types of accounts.

    With an NUA, when you take this type of in-kind distribution (payment in the form of securities rather than cash), the rules are complex. So keep in mind that this article is providing a high-level overview and is not a replacement for real-life advice regarding assets held in your retirement account. You should consult a tax professional with an understanding of distribution rules before modifying or adjusting a distribution strategy.

    There are several benefits to using an NUA with a distribution. For example, when securities are sold, any NUA is taxed at a long-term capital gains rate, which may be lower than an ordinary income tax rate. So, an NUA approach may help you manage your tax bill.1

    However, there are limitations, too. The NUA decision must be weighed against the potential market risk of holding a single stock upon distribution.1

    Once you reach age 73, you must begin taking required minimum distributions (RMD s) from your 401(k) or any other defined contribution plans in most circumstances. Withdrawals from your 401(k) or any other defined contribution plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10 percent federal income tax penalty.

    Each of these scenarios might feel complicated, or even confusing, but there’s good news. You have a financial professional in your corner who may be able to offer insights into your overall compensation strategy. Their assistance may be key in helping you make decisions about whether to add equity to your retirement assets.

    1.  Ameriprise.com, 2023.

    The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

  • Filing Final Tax Returns for the Deceased

    Filing Final Tax Returns for the Deceased

    When a family member passes away, there are many decisions that need to be made and many emotions to handle. The last thing anyone thinks about is taxes.

    Unfortunately, even the deceased can’t escape taxation. If the departed family member earned taxable income during the year in which they died, then federal taxes may be owed. An executor or a survivor must, therefore, file a final federal income tax return (Form 1040).1

    Similarly, if the deceased individual had a sizable estate or assets that might generate income in the future, the estate may owe taxes. Federal estate tax forms pertaining to the decedent’s estate may need to be filed (Form 1041, Form 706).2,3

    The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult a professional with tax expertise if you find yourself in this situation.

    Income Taxes

    The Internal Revenue Service generally gives you until April 15 of the year following the taxpayer’s death to file a final 1040 form. If the deceased was married, a surviving spouse has the option to file a final joint federal tax return for the last year in which the deceased lived.4

    If you file the return online, the IRS provides instructions on all of this. If you are filing a paper return, you must write “Deceased,” the decedent’s name, and the date of death at the top of the 1040 form. An appointed personal representative and/or surviving spouse must sign this return per IRS guidelines. If a refund is due, you may need to file a Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer).4,5

    Estate Taxes

    If an estate is large enough, Form 706 (the United States Estate Tax Return) is due to the IRS within nine months of the death of the deceased, with a 6-month extension permitted. The individual federal estate tax exemption is $12.92 million for 2023, so an estate smaller than $12.92 million may not be faced with estate taxes unless the deceased individual made substantial monetary gifts before their passing.6,7

    When the decedent’s estate has an executor or administrator (in IRS terminology, an “appointed personal representative”), they must sign the return for the decedent. For a joint return, the spouse must also sign. Alternatively, a survivor of the deceased can file the return.4

    If an estate generates more than $600 in gross yearly income within 12 months of that taxpayer’s death, it will also be necessary to file Form 1041 (U.S. Income Tax Return for Estates and Trusts), usually by April 15 of the year after the year in which the individual died. Should 100% of the income-generating assets of the deceased be exempt from probate, the need to file Form 1041 is removed. Estates required to file Form 1041 should consult a tax professional.8

    Lastly, there are some cases where expenses paid before death can be deductible. Under certain circumstances, part of the cost of treating a final illness may be deducted on the deceased’s final federal tax return.1

    You Are Not Alone

    A death in the family can take a heavy toll. In the event of such a tragedy, the last thing you may want to do is deal with the related financial issues. Contact us – we are here to help.

    1. IRS.gov, 2023
    2. IRS.gov, 2023
    3. IRS.gov, 2023
    4.  IRS.gov, 2023
    5.  Investopedia.com, March 3, 2022
    6.  IRS.gov, 2023
    7.  IRS.gov, 2023
    8. IRS.gov, 2023

    The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

  • Could your construction business qualify for an energy-efficient tax deduction?

    Could your construction business qualify for an energy-efficient tax deduction?

    Section 179D of the Internal Revenue Code allows a deduction for the cost of energy-efficient improvements to new or existing commercial buildings, as well as certain residential rental buildings. Originally a temporary incentive that was renewed several times, the tax break became permanent under legislation passed in late 2020. The legislation also called for the maximum deduction amount to be adjusted for inflation — making it even more valuable.

    Although the Sec. 179D deduction targets property owners who undertake energy-efficient improvements, it can also be available to certain contractors involved in government-funded projects.

    Gateway to eligibility

    Federal, state or local governments that make energy-efficient improvements to their new or existing buildings may allocate the deduction in writing to the taxpayer “primarily responsible for designing” the improvements.

    IRS guidance defines “designer” in this context as one who “creates the technical specifications for installation of energy-efficient commercial building property” as distinguished from one who “merely installs, repairs, or maintains the property.” Usually, that means an architect, engineer, or environmental or energy consultant.

    However, “construction contractors” who have significant input into the design of energy-efficient improvements — for example, those involved in design-build contracts with government entities — may also be able to claim the deduction.

    Qualifying improvements

    The Sec. 179D deduction is available for new construction as well as additions to or renovations of commercial buildings of any size. Multifamily residential rental buildings that are at least four stories above grade typically qualify, too. Building owners or designers may immediately deduct the cost of eligible energy-efficient improvements up to a qualifying amount. (Contact us for the specifics.)

    An eligible improvement is otherwise depreciable property installed as part of a building’s interior lighting system, HVAC and hot water systems, or building envelope. It must be part of a plan designed to reduce annual energy and power costs by at least 50% compared with applicable industry standards. An independent contractor or licensed engineer needs to certify the plan. Partial deductions are available for building components that achieve certain lesser energy savings targets.

    Previous tax years

    If you believe your construction company was entitled to Sec. 179D deductions for projects completed in previous tax years, but you failed to claim them at the time, you may file an amended return to recover the missed tax benefits.

    Bear in mind that the deadline for doing so is generally three years from the date you filed the original return. Building owners have another option: file IRS Form 3115, “Application for Change in Accounting Method,” and claim catch-up deductions in the current tax year. This option isn’t available to designers.

    Worth a look

    If your construction business works on energy-efficient improvements to government buildings, and is involved in creating the improvements’ technical specifications, it’s worth a look to determine whether you’re eligible to claim the Sec. 179D deduction. Also bear in mind that the Inflation Reduction Act, signed into law a little over a year ago, includes some important energy-related tax incentives as well. Our firm can provide further details.

  • Pay Yourself First

    Pay Yourself First

    Each month, you settle down to pay bills. You pay your mortgage lender. You pay the electric company. You pay the trash collector. But do you pay yourself? One of the most basic tenets of sound investing involves the simple habit of “paying yourself first” – in other words, making your first payment of each month a deposit into your savings account.

    The saving patterns of Americans vary widely. And too often, short-term economic trends can interrupt long-term savings programs. For example, the U.S. Personal Savings Rate jumped from 3.5% to nearly 8% in May 2008 during the housing and banking crisis. It then rose and fell sporadically as the economic environment appeared to stabilize. It peaked in December 2012 at 12%. As of 2021, the average rate has once again varied widely between about 15% to 28%, largely due to the COVID-19 pandemic.1

    The Genius of Pay Yourself First

    Anyone who’s ever managed their own finances knows that saving can be a challenge. There seems to be an endless stream of expenses that demand a piece of each month’s paycheck. Herein lies the genius of paying yourself first: you get the cream at the top of the bucket, and not the leftovers at the bottom.

    The trick is to prioritize. Make it a point to put your future first. At first, saving may mean a small lifestyle change. But most individuals want to see their net worth increase steadily. For them, finding ways to save becomes more of a long-term commitment than a short-term challenge.

    Putting Your Money to Work

    What will you do with the money you save?

    If retirement is your priority, consider taking advantage of tax-advantaged investments. Employer-sponsored retirement plans, such as 401(k)s, can be a great way to save because the money comes out of your paycheck before you even see it. Also, as an added incentive, some employers offer to match a percentage of your contributions.2

    For money you may want to access before retirement, consider placing the funds in a separate account. When the balance hits your target, you may want to move the money into investments that offer the potential for higher returns. Of course, this may mean exposing your money to more volatility, so you’ll want to choose vehicles that fit your risk tolerance, time horizon, and long-term goals.

    In the pursuit of growing wealth, sound habits can be your most valuable asset. Develop the habit of “paying yourself first” today. The sooner you begin, the more potential your savings may have to grow.

    1. Federal Reserve Bank of St. Louis, 2021
    2. Under the SECURE Act, in most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 73. Withdrawals from your 401(k) or other defined contribution plans are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty.

    The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.