I’d like to continue this video series which is a Summer Financial To-Do List.
And today, I want to discuss Analyzing your pay stubs: In line with the previous video on planning for a future tax seasons, an important step to maximize your tax benefit is reviewing your paystub. There are various benefits available through your employer, including an FSA (which is a Flexible Savings Account), HSA (which is a Health Savings Account), and 401(k) with a possible match. It may be worth sending a short e-mail to your colleagues in HR to understand ALL the available tax advantaged opportunities. Why not take full advantage of all the benefits and perks that your employer has to offer?
And while I am on the point of analyzing your pay stubs, please make sure you are maxing out your retirement accounts and these funds are invested correctly. Maxing out does not mean you are only contributing up to the your employer’s match. Rather, it’s making sure that if you are under 50 years old, you personally are contributing $23,500 and if you are over 50 year’s old you are contributing an additional $7,500 and, finally, if you are 60-63, due to the Secure Act 2.0, you are making an “enhanced contribution” in lieu of the regular catch up contribution of $11,250 which allows you to contribute up to $34,750 this year. Again, please check with your colleagues in Human Resources, to find out how much YOU can contribute. Not taking advantage of the full contribution limit means you’re not saving enough for your future, or maxing out your tax benefits this year.