Once September rolls around, it’s time again to prepare for open enrollment season. It’s important to review your company benefits every year to make sure they still align with your needs and life changes.
Since your employer will likely be in contact with you soon about open enrollment 2019, don’t forget to review these features:
Open Enrollment 2019: Investments Might Be Changing
Your company investments, like your 401(k), doesn’t necessarily stay the same from year to year. The investments included in your 401(k), like a mutual fund, for example, might get swapped out by your company.
Even if the investments do stay the same, open enrollment is a good time to check up on your accounts anyway. You want to make sure your investments still align with your goals, life stage and risk threshold.
Your Employer Might Be Changing the Match
When you have health insurance provided by your company, your employer pays a minimum percentage and the employees pick up the rest of the cost. Typically, your employer will cover about 70% to 80% of that cost (according to the Kaiser Family Foundation.)
However, the actual amount that your employer will cover can vary from year to year. So when your company sends out the annual information about your health insurance benefits, make sure you pay attention to those details so you’re not caught off guard later on.
Deferred Compensation Elections
Deferred compensation refers to a payment arrangement where your income is paid out later than when it was earned. This is typically for pensions, retirement plans and employee stock options.
In some cases, open enrollment time might be when you have the chance to make elections about how much to put into deferred compensation.
A lot of people end up randomly choosing when they receive deferred compensation, but that doesn’t take into account tax liabilities. Planning when you receive your payment more carefully means you can optimize that timing better.
One example of this is your 401(k). You have to start taking required minimum distributions once you hit age 70 ½. If you decide to take deferred comp in a lump sum, that additional income can move you into a higher tax bracket when you start taking those RMDs. But if you take deferred compensation payments in installments over time, you can reduce your tax liability on payouts when the time comes.
Don’t Forget About Health Savings Accounts (HSAs)
HSAs are a great tool to use not only for saving for medical expenses, but to cut down on tax liability. Take advantage of open enrollment time to set up an HSA if you have a high deductible plan.
I go more into detail about HSAs in this blog post, but one of the biggest perks is the triple tax benefit. That means that:
- Contributions are tax-free: Reduce taxable income by contributing with pre-tax dollars or use after-tax dollars to take a deduction
- Earn income tax-free
- Use HSA funds for qualified medical expenses and you won’t pay taxes on withdrawals
Do you need help getting your portfolio up to date? Contact me today to set up a meeting to talk about your goals. You can also download my free ebook for physicians for tips and information about getting your finances on track.