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What Financial Priorities Do You Need to Address in 2020?12/24/2019

Presented by MEMBERS Financial Services*

January is a good time to think about the investing, saving, or budgeting methods you could employ toward your financial, business, and life objectives this year. From building your retirement fund to managing your taxes, you have plenty of choices. Here are some ideas to consider:

COULD YOU CONTRIBUTE MORE TO YOUR RETIREMENT THIS YEAR?

In 2020, the annual contribution limit for employee 401(k), 403(b), and most 457 plans increased to $19,500. The catch-up contribution limit for employees aged 50 and over who participate in these plans is increased from $6,000 to $6,500.1

For Roth and traditional individual retirement accounts (IRAs), the 2020 contribution limit is $19,500 and the catch-up contribution is $6,500, making the maximum contribution for older savers $26,000.2

Your modified adjusted gross income (MAGI) may affect how much you can put into a Roth IRA: singles and heads of household with MAGI above $139,000 and joint filers with MAGI above $206,000 cannot make 2020 Roth contributions.3

COULD YOU TAKE A HOME OFFICE DEDUCTION FOR YOUR SMALL BUSINESS?

If you are a small-business owner, you may want to investigate this option. You may be able to legitimately write off expenses linked to the portion of your home used to exclusively conduct your business. Using your home office as a business expense involves a complex set of tax rules and regulations. Before moving forward, consider working with a professional who is familiar with home-based businesses.4

SHOULD YOU OPEN AN HSA?

A Health Savings Account works a bit like your workplace retirement account. There are also some HSA rules and limitations to consider. You are limited to a $3,550 contribution for 2020, if you are single; $7,100, if you have a spouse or family. Those limits jump by a $1,000 “catch-up” limit for each person in the household over age 55.5

If you spend your HSA funds for non-medical expenses before age 65, you may be required to pay ordinary income tax as well as a 20% penalty. After age 65, you may be required to pay ordinary income taxes on HSA funds used for nonmedical expenses. HSA contributions are exempt from federal income tax; however, they are not exempt from state taxes in certain states.

SHOULD YOU CHANGE YOUR WITHHOLDING STATUS?

It may need to be adjusted if you meet any of the following scenarios:

  • You tend to pay a great deal of income tax each year.
  • You tend to get a big federal tax refund each year.
  • You have recently married or divorced.
  • A family member recently passed away.
  • You have a new job and you are earning much more than you previously did.
  • You started a business venture or became self-employed.

ARE YOU GETTING MARRIED IN 2020?

If so, why not review the beneficiaries of your retirement accounts and other assets? You may also want to make changes to relevant beneficiary forms and your insurance coverage. If you will have a new last name in 2020, you will need a new Social Security card. Additionally, the two of you may have retirement accounts and investment strategies. Will they need to be revised or adjusted with marriage?

ARE YOU RETURNING FROM AN ACTIVE DUTY ASSIGNMENT?

If so, check the status of your credit and the state of any tax and legal proceedings that might have been preempted by your orders. Make sure any employee health insurance is still active, and revoke any power of attorney you may have granted to another person.

This information represents general guidelines and is not a replacement for real-life advice. Speak with a professional who understands your situation before making any changes.

Vow to focus on being financially healthy in 2020. Contact MEMBERS Financial Services* to make a no-cost, no-obligation appointment at an SLFCU branch:

  • Juan Tabo, Jefferson, Cottonwood, Paseo, Rio Rancho, or Los Lunas branches: call 505.237.3930.
  • Edgewood, Kirtland, Tech Park, or Livermore branches: call 505.237.7330.

1irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500 [11/6/19] 
2investopedia.com/ask/answers/102714/what-are-roth-401k-contribution-limits.asp [11/8/19]
3thefinancebuff.com/401k-403b-ira-contribution-limits.html [11/19] 
4nerdwallet.com/blog/taxes/home-office-tax-deductions-small-business/ [1/22/19] 
5cnbc.com/2019/06/03/these-are-the-new-hsa-limits-for-2020.html [6/4/19]


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

* MEMBERS Financial Services' Financial Professionals are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty States of the United States of America. FR-2825494.1-1119-1221 



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