Year-End Reminder: 2023 RMDs and IRA Contributions

As we near the end of 2023, it's worthwhile to check on contributions and withdrawals from your IRA accounts.
Reminder

Here are a few reminders from our financial advisors to help ensure you are optimizing the tax advantages for these accounts and working ahead to prepare for next tax season. (Scroll down for more detailed information.)

REQUIRED MINIMUM DISTRIBUTIONS (RMDs)

Beginning in 2023, the SECURE 2.0 Act raised the age to begin taking your RMD to 73. The amount of your RMD is determined by the IRS and changes from year to year. Visit IRS.gov to review the in-depth criteria for individuals subject to RMDs.

It is important to note that to avoid a significant penalty you MUST take out the Required Minimum Distribution amount for 2023 by December 31st.

Additionally, you can use your RMD to make Qualified Charitable Distributions (QCD) as non-taxable distributions up to $100,000. If your RMDs have the potential to increase your taxable income for the year, a QCD enables you to gift all or a portion of your RMD directly to a qualifying charity, and not pay any income taxes (up to $100,000) on the funds donated. If you take this route, there are a few important steps to follow, including making sure your IRA custodian sends the funds directly to the 501(c)3 for you – just be sure the charity of your choice deposits the check before the end of the year so it is attributed to 2023. Learn more here about QCDs and other strategies for charitable giving.

Questions about your RMDs?

The CWM Team has been in touch with clients regarding their RMDs for this year, however if you have questions about the status of your RMD or QCD, please contact us or call (425) 778-6160 to connect with the Admin Team.

IRA AND ROTH IRA CONTRIBUTIONS

If you have an IRA or a Roth IRA, maximum contributions for the 2023 tax year are1:

  • $6,500 (Roth contributions may be less depending upon income. Please consult your CPA before making your contribution).
  • Age 50+: Catch-up contributions may be made up to an additional $1,000 for a total of $7,500.

When submitting your contributions:

  1. Make checks payable to “Charles Schwab & Co fbo [your name]”. Do NOT make your check payable to CMW.
  2. On the memo line of the check write “2023 IRA Contribution” and include the 8-digit account number (see image below for an example). Not sure of the account number? The Admin Team can add that information to the check provided it is received by 3pm on Tuesday, April 9, 2024.
  3. For guaranteed deposit, your contribution must be received by CWM no later than 3pm on Tuesday, April 9, 2024 to ensure that the check will be processed and placed into your account by the IRS deadline.
  4. Contributions can be set up to be transferred from an individual, joint, or trust account held at Schwab. If you are interested in this option, please contact us or call the office at (425) 778-6160.

In addition to maximum contribution amounts increasing for IRAs and Roth IRAs, other types of accounts have seen an increase in maximum contribution amount2:

  • 401(k), 403(b), most 457 plans: $22,500 (an increase of $2,000 from 2022)
  • Health Savings Accounts (HSAs): $3,850 for an individual and $7,750 for a family (up $200 and $450 respectively from 2022)
  • SEP-IRA: $66,000 (an increase of $5,000 from 2022)
  • SIMPLE IRA and SIMPLE 401(k): $15,500 (up from $14,000 in 2022)

If you have additional questions or need to speak with a CWM advisor, contact us or give us a call at (425) 778-6160. We’re always happy to help at Comprehensive Wealth Management.

1 "Retirement Topics - IRA Contribution Limits." IRS.gov, 05 July 2023, https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

2 "2023 Tax Brackets and Contribution Limits." Scwhab.com, 09 Mar 2023, https://www.schwab.com/learn/story/2023-tax-brackets-and-contribution-limits

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