Recovering Women Wealth

Sober Women Managing Money & Mental Wealth

Tax-Advantaged Contribution Limits for 2020

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The IRS has announced most tax-advantaged contribution limits for 2020. I was waiting to release this post until they announced the Flexible Spending Account (FSA) contribution limits. For some reason, that one was the last to be released.

Being that I’ve started saving for retirement late, I max out all the tax-advantaged accounts I can get my hands on now. That being said, I have an end of the year calendar reminder to notify the accountant who handles payroll at my job to up my contributions accordingly. Each year as the IRS raises the allowable contribution limits, I raise my pre-tax contributions.

This post is to inform you of all tax-advantaged contribution limits for 2020. If I’ve missed any, please feel free to let me know. Additionally, if you are not able to max out any of these accounts, don’t let that intimidate you. Just begin!

Photo by Danielle MacInnes on Unsplash

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The power of being wrong; I’m switching to a Traditional IRA

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I never liked to be proven wrong in my past. In fact, it still stings when it happens today but the difference is I welcome a challenge! I want to get better at life and that means allowing for corrections. My choice to max out a Roth IRA was under a false assumption on my part. I’ve been challenged and am switching to traditional IRA!

Why I chose a Roth IRA

As I’ve revealed in multiple places on my blog and most recently in my article on 2019 contribution limits, I’m maxing out three tax-advantaged accounts:

  1. Employer-Sponsored Simple IRA ($12,500 for 2018 ; $13,000 for 2019)
  2. HSA ($3,450 for 2018; $3,500 for 2019)
  3. Roth IRA ($5,500 for 2018; $6,000 for 2019)

I made the false assumption that I could not max both a simple IRA and a traditional IRA and deduct the contributions both. Why? Because I failed to verify.

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Have you planned your 2019 contribution limits?

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It is December and we are nearing the end of another year. Do you know what that means?? It means new contribution limits for our tax-advantaged accounts!! Just today I sent the bookkeeper at my job an email asking her to up my 2019 contribution limits for my two pre-tax accounts.  Now is the time to be planning our 2019 contributions.

Each year the IRS may increase the contribution limits on tax-advantaged accounts so it’s worthy to be aware of them. Especially if you are maxing out your contributions each year.

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The Magic of Health Savings Accounts

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Health Savings Accounts (HSAs) can be a great tool for trifecta tax efficiency. Yep, I said trifecta!  Additionally, they can be used as an investment vehicle.

Who doesn’t love to legally avoid paying taxes?? I do!

I wanted to invest in an HSA account. However, formerly my employer-sponsored health plan did not allow for that.

I did some research and was able to convince my boss into providing an HSA qualified option for me. Which leads me to the next point…

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