Last-minute tax tips to increase your savings.

Last-minute tax tips to increase your savings. The following are just little tweaks to most people's retirement savings plans. Health savings accounts were designed to help people pay for their share of high deductible medical insurance plans. However, they offer a rare triple tax break: your contributions are deductible going in, the money grows as tax-deferred, and withdrawals are tax-free if used to pay for qualified medical costs. Many financial experts recommend funding an HSA even before contributing enough to a 401(k) plan to get the full company match. To take advantage of this strategy, HSA owners need to leave the HSA money alone to grow. Therefore, deductibles and co-pays must be paid separately, while the money in the HSA grows. Backdoor Roth contributions- Roth IRAs offer tax-free withdrawal. However, in retirement that is significant for those with enough time to let the magic of compounding work. Would you rather pay no taxes on $5500 today (the maximum contribution) or no taxes on many times that amount when you retire? The ability to contribute ends when your modified adjusted gross income in 2017 exceeds $133,000 or if your filing status is single or $196,000 for married couples filing jointly. The back door Roth allows taxpayers to get around those limits. First, taxpayers contribute to a traditional IRA and then convert those to a Roth IRAs. There is no income limit on Roth conversions. Income taxes are typically owed on conversions but the bill could be low or even zero if the taxpayer doesn't take a deduction and doesn't have that much money in IRAs outside of the one being converted. Taxes on a conversion are based on the proportion of the taxpayers IRA holdings that haven't yet been taxed. Substantial backdoor Roth contributions are possible if you work for a company that has a 401(k) that matches contributions and allows for after-tax contribution beyond the usual deferral limits of $18,000 annually plus a $6000 catch-up provision for people 50 and older the IRS actually allows up to $53,000 to be contributed to 401K including pretax after-tax and employer contributions. If your 401(k) plan allows for these additional options and most do not. That means you could put up to $35,000 more in your account. You can frequently roll over in the same plan to your Roth 401(k) while you are still working. Therefore the gains and any taxes would be minimized. If you wait until you quit or retire, then you could have a lot of gains that would trigger taxes. It is unknown how many 401(k) plans allow for both after tax contributions and in-plan or in-service conversions. Please check with your plan provider.