It's 2025! We wish you all a happy and prosperous New Year! You've probably been spending some time thinking about New Year's Resolutions and what you would like to accomplish in 2025, financially and otherwise. Some financial tasks are best addressed at the start of the year, and we will talk about these in this month's FEW Review. We will also go over the new retirement account contribution limits in our Finance Fundamentals. Make sure you are taking full advantage of your tax-advantaged retirement accounts!

ANNOUNCEMENTS

Next Virtual Event February 6th at 6 PM MT – Your money mindset is shaped by four key influences: generation, family, culture, and societal norms. Julia Myers, PharmD, MBA will break down how these factors impact your beliefs about money, identify your strongest financial influence, and teach practical ways to align your financial decisions with your core values. We can't wait for this session on "Mastering Your Money Mindset and Navigating Financial Influences for the Whole Family." Watch for an email with the link to join the virtual event.

$200 Off In-Person WCICON25 Registration – The start of a new year is the perfect time to recommit to your financial life—and those new CME dollars can make it happen. Connect with hundreds of docs doing the same and enjoy meetups with the FEW Community at the Physician Wellness and Financial Literacy Conference in San Antonio, February 26 – March 1, and gain the tools to build a healthier, wealthier future.

If you need an extra nudge, take $200 off your in-person registration (code SAVE200) or $100 off virtual (VIRTUAL100) until January 27th. Learn More and Register

Expert Witness Startup School Enrollment Now Open – Launch and build an expert witness business in 4 weeks to quickly build another source of income while still doing what you do best – being a doctor. BONUS: Get our Continuing Financial Education 2023 Course with Enrollment! ($779 Value) Learn More and Enroll by January 27th

FINANCE FUNDAMENTALS

Dr. Jim Dahle
WCI Founder

2025 Retirement Account Contribution Limits

Contribution limits for 401(k)s, 403(b)s, 457(b)s, IRAs, Roth IRAs, HSAs, FSAs, SIMPLE IRAs, and SEP-IRAs are all indexed to inflation. While the retirement contribution limits do not go up every year and while every account does not use the same formula for when there will be an increase, you will generally see an increased contribution every year or two.

Inflation exploded in 2022, all the way up to 9.1% in July, and as a result, the 2023 contribution limits for many of these accounts were increased in a relatively significant way. But inflation has been tamed in the past two years, and as a result, the increases in those limits for 2025 aren't quite as extravagant. Remember that in 2025, catch-up contributions will be increased even more for those who are 60-63 years old (it'll be the larger of $10,000 or 50% more than the regular catch-up contributions).

401(k) and 403(b) Employee Contribution Limit

The total employee contribution limit to all 401(k) and 403(b) plans for those under 50 will be going up from $23,000 in 2024 to $23,500 in 2025. The catch-up contribution limit will stay the same at $7,500 in 2025, so if you're 50+, your 401(k) employee contribution limit will be $31,000 in 2025. If you are aged 60-63 by the end of 2025, your catch-up contribution will be $11,250.

401(k)/403(b)/401(a) Total Contribution Limit

The total of all employee and employer contributions per employer will increase from $69,000 in 2024 to $70,000 in 2025 for those under 50. With the catch-up remaining at $7,500, the total contribution for those 50+ will be $77,500. If you're 60-63, that contribution increases to $81,250.

Note that the 401(a) limit is separate from the 403(b) limit. So, you could theoretically get $70,000 into each of them.

457(b) Contribution Limit

457(b) contribution limits will increase from $23,000 in 2024 to $23,500 in 2025. 457(b)s have unique catch-up contribution rules, so consult with your plan administrator if you are interested in putting more in your 457(b).

Traditional and Roth IRA Contribution Limits

IRA contribution limits and catch-up contributions will remain the same from 2024. That means you can contribute $7,000 or $8,000 if you're 50 in 2025. Recall that even a non-earning spouse can contribute to their own IRA each year.

SEP-IRA Contribution Limits

SEP-IRA contribution limits will increase to $70,000 per year for 2025, up from $69,000 in 2024.

SIMPLE IRA and SIMPLE 401(k) Contribution Limits

The SIMPLE IRA and SIMPLE 401(k) contribution limits will increase from $16,000 in 2024 to $16,500 in 2025.

Health Savings Account (HSA) Contribution Limits

For single people, the HSA contribution limit will increase from $4,150 in 2024 to $4,300 in 2025. Family coverage will increase from $8,300 to $8,550. The $1,000 catch-up contribution for those 55+ remains the same.

Flexible Savings Account (FSA) Contribution Limits

Healthcare FSA contribution limits will increase from $3,200 in 2024 to $3,300 in 2025. Note that there are other types of FSAs (such as dependent care FSAs) with different limits.

While it feels like all of these are increases, they are really just keeping up with inflation. They are just cost of living increases. On a real (after-inflation) basis, they're basically the same.

WCI RESOURCES

Student Join Dr. Jim Dahle and Andrew Paulson of Student Loan Advice for a high-yield webinar on what medical and dental students need to know about money. This information can literally make a difference worth millions of dollars over the course of a career. You simply cannot afford to wait until the "big paychecks" start rolling in to learn about money.

Please help spread the word about this free event. A recording will be sent out to those who register.

MEET OUR MEMBERS

Julia Myers, PharmD, MBA
February's Virtual Event Presenter

Growing up in STL (Saint Louis) I couldn't wait to get out of town and explore wide open spaces. I attended an affordable state school, the University of Wyoming, and competed as a Division 1 Athlete in springboard and platform diving. I started saving early, even investing some of my student loans in the market. I graduated from pharmacy school one year early and with very little debt in 2007. I quickly relocated to Phoenix, Arizona to start my career as a community pharmacist specializing in HIV care. I learned the hard way about the cycles of real estate when buying my first home in Phoenix that year. I've only jumped back into real estate investing in the last 4 years.

After practicing in the corporate world for seven years, I was ready for more. I relocated to University of Missouri Health Care in 2012. I completed my Executive MBA with a focus in Health Care Leadership at the University of Tennessee - Knoxville in 2018. After a life changing medical event in 2022, I medically retired from practicing pharmacy. In 2024, I left health care completely to pursue my next chapter of entrepreneurship. Through many financial lessons, including a divorce and blending families, I can speak to the power of having a financial plan. Even the most unexpected and ironic events, like losing your eyesight as a pharmacist, can sharpen your perspective to reveal what really matters. Stepping away from health care 2 years ago was possible because we were prepared. My secret investment account is the 457 because we are on track to semi retire early. My newest love is bonus depreciation in real estate and equipment rentals to pay as little tax as legally possible.

I absolutely love traveling. My travels in 2024 took me to Patagonia, Chile for a 5 day through hike with my husband and Japan for my son's high school graduation trip. I love houseplants and gardening, listening to audiobooks and podcasts, and my favorite morning treat is a dirty chai latte!

As a wife and mom to five children and a recovering perfectionist, I founded Generational Wisdom to help wealthy working families pass on financial maturity while avoiding entitlement with wisdom and common sense. Talking about money is hard, but you can't avoid the topic. Especially with kids.

FIVE FAVORITES

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Give Your Kid a 7-Figure HSA – There are plenty of different ways to help your kids become wealthy. Check out this HSA loophole that could make your kid a millionaire.
10 Reasons You're Not Stupid for Paying Off Your Debt – Do you want to pay off your low-interest mortgage or student loan? You don't need to feel dumb or embarrassed about paying off your debt.
Is Financial Planning Different for Dual-Income Couples? – Dual high-earner couples have some significant financial disadvantages. The advantages, however, probably more than make up for them.
The End Matters Most: Compound Interest at Its Finest – Compound interest is vastly important in your financial life. But don't quit it too early or you'll miss out on huge gains.
What to (Not) Do if You're Sued — Lessons from an Expert Witness – The risk of being sued is the elephant in the room during every clinical encounter with patients. Here's what to do if it happens.

FEW REVIEW

Michelle Baker, DPT
WCI Community Liaison

Beginning of the Year Financial Tasks

What are some of the money management items that are best to take care of as the new year begins?

#1 Frontload Your Contributions to Tax-Protected Accounts

Time in the market is one of the best ways to maximize your account growth.

HSA - This is a triple tax-free account, so if you have one, do it first.
Backdoor Roth IRA - It can take a few days to settle the money in your traditional IRA before you can do the Roth conversion. You can shave time off this process for next year by moving the money from your bank into a MMF at the brokerage where you hold your IRA at the end of the previous year, so it's a very quick transfer on January 2. I did this for the first time this year, and it was unbelievably painless. It's so much cleaner to just get the Backdoor Roth IRA done at the beginning of the year so you avoid any issues that may cause your contribution to be pro-rated, and it simplifies the paperwork too.
Individual 401(k) - You don't have to have earned the money before you contribute it. You just need to earn it before the end of the year, so frontload it if you can.

#2 Get a Fresh Start on Tracking Your Cash Flow (Money In/Money Out)

The beginning of the year is a perfect time to start keeping better records. Do you want to save more this year? Take more/better vacations? Be more intentional about what you spend on?

Decide how you will do it, how often you will do it, and make a game plan.
Use technology to make it easier. An app like Monarch, YNAB, Empower, or SimpliFi can automate and simplify tracking your net worth, account growth, spending patterns, and savings goals.

#3 Increase Your Savings Rate

Calculate your savings rate from last year now by dividing how much you saved for retirement by your gross income. For doctors and others who get a late start on retirement savings, this number should be 20%. Didn't quite hit that last year? What can you do to boost it?

If you only contributed enough to your 401(k)/403(b) to get your employer match, see if you can increase your employee contribution this year. Saving in tax-protected accounts increases your savings because the government is subsidizing your efforts.
Already maxing out your retirement savings? Great job! Maybe there are short term savings you can boost, like a vacation fund, house downpayment, college fund, or emergency savings.
Make it automatic that your savings come out of your pay first. For example, pay yourself first, whether it's via payroll contributions or bank savings account buckets.
Minimize your fixed expenses. Buy a smaller house, refinance mortgages and student loans to lower rates when you can, avoid getting locked into payments on consumer debt, car loans, or recurring contracts.

#4 Evaluate Your Tax Withholdings and Adjust Your W4 If Necessary

Are you getting a large refund with your tax return each year? Do you end up paying? Have you had a change in your life that will impact your taxes, like a marriage or divorce or losing or gaining a dependent?

Tweak your withholdings so you aren't loaning the government money or getting stuck with a big tax bill in April.

#5 Review Your Insurance Coverage

Do you have disability insurance in place? Have you increased your coverage as your income has gone up?
What about term life insurance? Do you have enough as your dependents/income have increased?
Do you have an umbrella policy in place? Is it covering your vulnerable assets?

#6 Check the Status of Your Estate Plan

Do you have a will?
Are your retirement account beneficiary designations up to date?
If you have added a dependent, do you have a legal guardian designation in place?
Do you need to set up a trust? If you already set one up, did you actually fund it?
How about an advanced directive: living will, durable power of attorney, etc.?

Do any of these items need your attention? Put it on your to-do list now and prioritize getting it done.

We love to hear from our FEW members in the Facebook group. If you haven't joined the group yet, check your FB email for the invite or email few@whitecoatinvestor.com and we will send you a new one!