Tag Archives: Cahaba Wealth Management

Getting Ready for the New Year

12/2022

As we begin wrapping up the 2022 tax year and planning for 2023, we wanted to make note of the announcements the IRS recently made for the 2023 tax year. In a year that was highlighted by soaring inflation putting pressure on taxpayers and their families, the IRS made unprecedented changes to the retirement plan limits and raised the income thresholds for each tax bracket. The government hopes to stimulate economic activity by allowing Americans to keep more of their earnings and increase their retirement contributions. Here are the important changes to know going in to the New Year:

Retirement Plan Limits

2023 Limits2022 Limits
401(k)/403(b)/457(b) Elective Deferrals$22,500$20,500
Traditional and Roth IRA$6,500$6,000
Catch-Up Contribution (plans other than SIMPLE plans)$7,500$6,500
SIMPLE Plan Employee Deferrals$15,500$14,000
SIMPLE Plan Catch-Up Contributions$3,500$3,000
Plan Maximum Annual Contribution – Defined Contribution Plans$66,000$61,000
Maximum Annual Benefit – Defined Benefit Plans$265,000$245,000
Compensation Limit under Section 401(a)(17)$330,000$305,000
(Source: www.irs.gov)

Health Savings and Health Flexible Spending Accounts

2023 Limits2022 Limits
 HSA – Annual Contribution Limits
   Self-Only Coverage$3,850$3,650
   Family Coverage$7,750$7,300
   Catch-up Contributions (age 55 or older)$1,000$1,000
FSA – Annual Contribution Limits
   Self-Only Coverage$3,850$3,650
   Family Coverage$7,750$7,300
(Source: www.irs.gov)

Standard Deductions

2023 Limits2022 Limits
Single$13,850$12,950
Married Filing Jointly$27,700$25,900
Head of Household$20,800$19,400
(Source: www.irs.gov

Other Changes for 2023

  • In addition the changes mentioned above, 2023 will bring revisions to the tax brackets, exemptions and credits, and limitations. 1
  • The Alternative Minimum Tax (AMT) exemption will increase to $81,300. AMT is in place to ensure higher income earners pay at least a minimum amount of tax. 1
  • Also in 2023, the Social Security Administration announced an 8.7% cost-of-living adjustment (COLA) Social Security retirement and disability beneficiaries. 2
  • The first $17,000 of gifts to any person are excluded from tax, up from $16,000. The exclusion is increased to $175,000 from $164,000 for gifts to spouses who are not citizens of the United States. 1
  • The Earned Income Tax Credit (EITC) increased the maximum credit amount to $7,430. This is a refundable tax credit for low and moderate-income workers. 1

If you’re curious how the new changes will affect your bottom line, we are here to talk about your plan. As always, we appreciate the opportunity to be of service.

We wish you a joyful and fulfilling New Year!

1 Source: www.irs.gov

2 Source: https://www.ssa.gov/cola/

Cahaba Wealth Management is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser does not constitute an endorsement of the firm by the SEC nor does it indicate that the adviser has attained a particular level of skill or ability. Cahaba Wealth Management is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Content should not be construed as personalized investment advice. The opinions in this materials are for general information, and not intended to provide specific investment advice or recommendations for an individual. Content should not be regarded as a complete analysis of the subjects discussed. To determine which investment(s) may be appropriate for you, consult your financial advisor.

Courage

12/2022

By William Jackson, CFP®

When discussing successful wealth management, most will typically include investment management/asset allocation, cash management, risk management, and other predictable factors. What is typically omitted or minimized relates to behavioral psychology.  How one reacts to adversity is arguably more impactful to long-term success than all the other factors combined.  Specifically, having the courage to stay the course during uncertain times is often the greatest determinant of long term success.

Holistic financial planning permits a good advisor to focus every conversation on the client’s long term plan.  This approach enables the advisor to provide a service that truly helps clients lead their lives with greater financial clarity.  The challenge is that we work in an industry that is intentionally opaque.  Having a plan and staying the course is not standard operating procedure for the majority of industry participants.  These firms have a strategy of offering reactionary products to clients that attempt to solve the problem of the day.  They bombard our inboxes with updates to make us aware of solution “de jour”.  Frequently, these products are of a complex nature, and render the buyer feeling underqualified to understand but worried about missing out.  These firms are well aware that when clients are overwhelmed with “over their head” concepts, they might feel hesitant to ask questions. This ultimately results in many clients agreeing to purchase products that are often unnecessary or even inappropriate for their personal plans.  A good advisor who is “fee-only” and focused on financial planning serves as an agent of clarity with the mission of helping clients understand why any products chosen for them are beneficial and necessary.  This might sound simplistic, but the rewards are real.

The foundation of Cahaba Wealth was built on knowing our clients and their financial goals.  We provide comprehensive financial planning in a way that leads clients to have greater understanding of their financial lives.  The financial plan dictates the investment plan. The investment plan and process are intentionally designed to encourage a discipline that has shown to be beneficial to long term wealth creation.  In asking you to trust in the process and have the courage to take a road less traveled, we are demonstrating our commitment to your success. We are aware of the magnitude of this request and are grateful for the faith shown.

Eleanor Roosevelt wrote, “You gain strength, courage and confidence by every experience in which you really stop to look fear in the face. You are able to say to yourself, ‘I have lived through this horror. I can take the next thing that comes along.’ You must do the thing you think you cannot do.”

We are proud to call you clients and thankful for the opportunity to serve.

Client Recognition

11/2022

Happy Holidays from Cahaba Wealth Management! This season, we like to reflect on how fortunate we are to work with clients who help us live our firm’s mission and values. This year, we would like to specifically applaud the generosity of our clients.

So far in 2022, we have sent out more than 200 separate Qualified Charitable Distributions from client IRAs, representing gifts approaching $1 million. We have also assisted clients with donating close to $3.5 million worth of highly appreciated securities into Charitable Donor Advised Funds. This is in addition to any personal charitable donations our clients make.

As our core values state, “Giving back matters. We invest in the communities where we live”. We are extremely proud to work with many clients who value the same.

We wish you and your families a safe and happy holiday as we continue to serve!