The Treasury Department and Internal Revenue Service (IRS) recently announced that the federal income tax filing deadline for individuals for the 2020 tax year will be extended from April 15^th to May 17^th, 2021. This gives many people a bit more time to get organized.

Navigating your taxes can be complex, and it is important that you understand how you can most efficiently save and invest for your future while considering both long and short-term tax implications. To help give you information on tax rates, tax-advantaged savings, and opportunities to improve your tax outcomes, we’re sharing this webinar replay from Marsh and McLennan Agency, LLC.

There are few retirement-related tax details that may help you:

• Saver’s Tax Credit: Depending on your income and filing status, you may be eligible for a tax credit equal to a percentage of your retirement plan contribution for the year. The IRS website gives more information on this credit.

• Employer-Sponsored Retirement Plans: Eligible contributions to your employer’s retirement plan can typically be made on a pre-tax or Roth basis:
  • Pre-Tax: You don’t pay income taxes on the contributions now; instead, you’ll pay income taxes on the contributions and earnings when you distribute the money via a cash distribution.
  • Roth: You do pay income taxes on your contributions now. You can then distribute the contributions and earnings via a qualifying distribution without incurring taxation later.

• Health Savings Account (HSA): If you are eligible to make contributions to an HSA, there is the potential for a triple tax advantage. Your contributions are made with pre-tax dollars, they can grow tax-deferred, and you can withdraw the money tax-free for qualifying healthcare reasons. Your balance can accumulate over time and even be used to help offset qualifying healthcare expenses in retirement.

For informational purposes only, and not intended as advice. This is a summary of details that may be helpful when reviewing your tax outcomes, but not a complete analysis on all topic covered. Marsh and McLennan Agency, LLC is not a tax preparer. You should seek the guidance of a tax professional for advice on your specific situation.