The start of a new year is a good time to reset and make sure key planning items are on track. A few small adjustments made early can compound meaningfully over the rest of the year. Rather than waiting until year-end, reviewing these items now can help keep things running smoothly and avoid rushed decisions later.
Review IRA/401K contributions
IRA and 401(k) contribution limits have increased to $7,500 and $24,500 this year. Increasing contributions earlier gives 
your savings more time to compound and reduces the need to “catch up” later in the year. Historically, there has been an advantage to getting money into retirement accounts sooner, as markets have tended to rise over time. While maxing out 401(k) contributions early can impact short-term cash flow, high earners may benefit from doing so — with more money invested earlier and larger paychecks later in the year.
It’s also worth revisiting whether contributions should be directed to traditional, Roth, or a combination of both, based on current income levels and expected tax brackets.
Revisit Tax Withholding
Most households can expect to benefit from the new tax law passed last year. In fact, a recent Wells Fargo report estimates that tax refunds will increase by roughly 18%. While receiving a refund can feel like a nice surprise, it often means your income was reduced unnecessarily throughout the year.
We recommend using the IRS’s free withholding calculator to review and adjust your withholding if needed. Doing so can increase take-home pay during the year while reducing the size of an expected refund. In many cases, a large refund simply means you made an interest-free loan to the government — money that could have been invested or used for your own priorities. Reviewing withholding early helps reduce the risk of over- or under-withholding and keeps cash flow more predictable throughout the year.
Taking advantage of cash yields
While cash yields are not as high as they were two years ago, they remain elevated relative to much of the past 15 years. High-yield savings accounts are currently paying roughly 3.20–3.50%, while risk-free Treasury bills and CDs offer yields closer to 3.40–3.70%. Meanwhile, many large banks continue to pay little to nothing on savings balances, making them inefficient places to hold cash.
We often recommend online savings accounts from providers like Discover or American Express for everyday cash. For investors in low- or no-tax states, CDs can be attractive, as their yields are often 5–10% higher than Treasuries on a pre-tax basis. For those in high-tax states such as New York, Treasuries can be more compelling since the interest is exempt from state income taxes.
In addition, it’s worth having a plan for how — and when — excess cash might be put to work in the market. We frequently hear from clients who say they would invest more if markets “went down,” but without defining what that means, those opportunities can be difficult to act on. Writing down a simple rule, such as “If the S&P 500 falls 10%, I will invest $25,000 in an index fund,” can help remove emotion from the decision. Without a plan, investors often hesitate or wait for markets to fall further. Formalizing an approach ahead of time can significantly improve the odds of following through.
Household items
Some other miscellaneous items to focus on include:
- Ensure correct beneficiary designations on accounts
- Review estate planning documents//establish estate plans (refer to this document)
- Check insurance coverage (deductible resets, new premiums, etc)
- Double check employer benefits for new updates
Early-year planning isn’t about predicting markets or making dramatic changes. It’s about taking care of the fundamentals while there’s time to be thoughtful rather than reactive. Reviewing contributions, cash management, withholding, and planning documents now can help keep the rest of the year on track.
If you’d like help reviewing any of these items or want to make adjustments, please let us know — we’re happy to help.
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