The 3rd series in our blog post will cover retirement savings, long-term care insurance premiums, HSAs (health savings accounts) and FSAs (flexible spending accounts).
Retirement savings:
Good news for retirees! The beginning age for taking required minimum distributions (RMDs) rises to 73 from 72 for owners of traditional IRAs, 401(k)s and other workplace retirement plans. This applies to account owners who turn 72 after 2022. If you turned 73 in 2023, you must take your first RMD by April 1, 2024. People who work past 73 can generally delay taking RMDs from their current employer’s 401(k) until they retire.
The penalty for failing to take a RMD is lower. Starting in 2023, the excise tax for such failures is 25% of the missing RMD amount, which is down from 50%. Additionally, the penalty goes down to 10% for failures that are corrected in a timely manner.
For information if you are still saving for retirement, please reference the PPL blog post on this subject Higher IRA and 401 (k) Contribution Limits for 2024.
Long-term care insurance premiums:
Limits on premium deductions for LTC are higher for 2023.
- Ages 71 to 80 can deduct up to $5,960
- Ages 61-70 can deduct up to $4,770
- Ages 51- 60 can deduct up to $890
- Younger than 40 can take up to $480
Health Savings Accounts (HSAs):
The annual cap on deductible contributions to health savings accounts (HSAs) rose in 2023 to $3,850 for self-only coverage and to $7,750 for family coverage. People born before 1969 can put in $1,000 more.
Read the PPL Blog Post on HSAs for detailed information.
Flexible Spending Accounts (FSAs):
The limit on employee contributions to a healthcare flexible spending account (FSA) is $3,050. If the employer’s plan allows the carryover of unused amounts, the maximum carryover amount for 2023 is $610.