Current Contribution Limits for Retirement Accounts and Health Savings Accounts | Affinity Capital
December 5, 2023
The Internal Revenue Service (IRS) sets annual contribution limits for retirement accounts and health savings accounts (HSAs). These limits are designed to prevent people from contributing too much money to their tax-advantaged accounts and avoiding taxes.
Retirement Account Contribution Limits
- Traditional IRA | $6,500 ($7,500 if age 50 or older)
- Roth IRA | $6,500 ($7,500 if age 50 or older)
- 401(k) | $22,500 ($30,000 if age 50 or older)
- 403(b) | $22,500 ($30,000 if age 50 or older)
- SIMPLE IRA | $16,000 ($35,000 if age 50 or older)
HSA Contribution Limits
- Individual | $3,850
- Family | $7,750
- Catch-up contribution (age 55 or older) | $1,000
Tax Advantages of Retirement Accounts and HSAs
Retirement accounts and HSAs offer a number of tax advantages, including:
- Tax-deferred contributions: With tax-deferred contributions, you make contributions to your account with pre-tax dollars. This means that you reduce your taxable income for the year in which you make the contribution. You will pay taxes on the money when you withdraw it in retirement.
- Tax-free growth: The money in your account grows tax-free. This means that you do not pay taxes on the investment earnings until you withdraw the money in retirement or for qualified medical expenses (in the case of an HSA).
- Tax-free withdrawals: If you withdraw money from a qualified retirement account in retirement or for qualified medical expenses (in the case of an HSA), you may be able to do so tax-free. This is especially beneficial if you are in a lower tax bracket in retirement than you are in your working years.
How to Choose the Right Retirement Account and HSA for You
The best retirement account and HSA for you will depend on your individual circumstances. Here are a few things to consider when choosing a retirement account and HSA:
- Your income: If you have a high income, you may not be able to contribute to a Roth IRA.
- Your employer's retirement plan: If your employer offers a 401(k) or 403(b) plan, you should consider contributing to it. Your employer may offer matching contributions, which is free money that can help you to save even more for retirement.
- Your health insurance: If you have a high-deductible health plan (HDHP), you are eligible to open an HSA. HSAs can be a great way to save money on taxes and healthcare costs.
- Your retirement goals: If you are saving for a specific goal, such as a down payment on a house or retirement, you may want to choose a retirement account or HSA that offers certain features, such as the ability to take early withdrawals without penalty.
Retirement accounts and HSAs offer a number of tax advantages that can help you to save money and reach your retirement goals. It is important to choose the right retirement account and HSA for your individual circumstances and to take advantage of the tax advantages that are available to you.
Here are some additional tips for maximizing your tax advantages with retirement accounts and HSAs:
- Contribute early and often: The earlier you start saving for retirement, the more time your money has to grow. Even if you can only contribute a small amount each month, it will add up over time.
- Take advantage of catch-up contributions: If you are age 50 or older, you are allowed to make catch-up contributions to your retirement accounts and HSAs. This is a great way to boost your retirement savings if you fell behind earlier in life.
- Consider a tax-efficient investment strategy: When choosing investments for your retirement accounts and HSAs, consider tax efficiency. This means choosing investments that generate less taxable income.
- Review your accounts regularly: As your financial situation changes, you may need to adjust your retirement account and HSA contributions or investment strategies. Be sure to review your accounts regularly to make sure that you are on track to reach your retirement goals.
The first four months of 2026 have been a useful reminder that markets do not move in straight lines. After entering the year at record highs, U.S. equities pulled back sharply on geopolitical tensions tied to the Iran conflict, with the S&P 500 coming close to a ten percent decline before recovering much of that ground. Volatility has returned again on rising energy prices and a softer tone from the technology sector that has carried so much of this cycle’s leadership. Oil sits near one hundred dollars per barrel, the ten-year Treasury yield hovers near four and a half percent, and traditional diversification between stocks and bonds has been less reliable than many investors have come to expect. None of this changes our long-term view. It does sharpen a conversation we believe every household within ten years of retirement, on either side of that line, should be having right now. THE QUESTION THAT MATTERS MOST After more than thirty years of advising families through every kind of market, I have come to believe that one question matters more than almost any other in retirement planning. It is not what your average return will be. It is not even how much you have saved. The question is this: in what order will those returns arrive, and what will the portfolio be doing when they do? Two households can finish their working years with identical balances and identical long-term average returns. One can run out of money. One can remain wealthy for life. The only difference between them is the order in which good and bad years happened to fall. WHY ORDER MATTERS MORE THAN AVERAGE When a portfolio is accumulating, a market drop is something close to a gift. Contributions buy more shares at lower prices. When a portfolio is distributing, the same drop is a wound. Every dollar withdrawn during a downturn cannot participate in the recovery, and the base from which all future growth compounds is permanently smaller. Retirees who began withdrawals in 1973, in 2000, or in 2008 lived through outcomes quite different from those who retired even two or three years earlier or later. Same averages over the long arc. Very different lives for the family. THE RETIREMENT RED ZONE Retirement planning does not begin the year you stop working. It begins five to ten years before. We sometimes call that window the retirement red zone, and it is the period in which the wrong portfolio, held too long, can do real and lasting damage. A portfolio that served someone beautifully through their fifties is rarely the right portfolio for the first decade of withdrawals. Waiting until the retirement date itself to reposition is not a plan. It is a hope. HOW WE REPOSITION PORTFOLIOS Repositioning is a multi-year process, not a single trade. We model honest cash-flow needs in dollars. We construct one to three years of withdrawals in stable, liquid reserves so no client is ever forced to sell equities into a falling market. We build an intermediate layer of high-quality bonds to refill those reserves over time. We sequence withdrawals across taxable, traditional, and Roth accounts to manage lifetime tax cost, often using the years before Social Security and required minimum distributions for thoughtful Roth conversions. We rightsized concentrated and legacy positions over multiple tax years. And we stress test the plan against a meaningful market drop in year one before any client crosses the retirement line. A CLOSING THOUGHT Sequence risk is not really a math problem. It is a human one. The discipline to reposition during good markets, when it can feel almost unnecessary, is what separates retirees who sleep well from those who reach for the wrong decision at the worst possible moment. By the time a dramatic market drop arrives, the work either has been done or it has not. Whether you are a long-time client of Affinity Capital or considering a relationship with our firm, we would welcome a conversation about how your portfolio is positioned for the years ahead.
If it feels like the news cycle has been louder than usual lately, that's because it has been. Geopolitical tensions across multiple regions, shifting U.S. trade relationships, and a rapidly changing domestic political landscape are all contributing to elevated market volatility. We want to take a moment to share our perspectives on what this means for your portfolio and for the broader inflation picture. What's Happening Globally We are in an extraordinary moment. The U.S. is reshaping its economic and geopolitical relationships in ways that are accelerating global fragmentation and creating real uncertainty for businesses and investors alike. Energy markets have been particularly sensitive to these developments, with commodity prices responding sharply to supply disruptions and shipping route concerns. Most forecasters believe current disruptions are short-lived and expect prices to moderate as conditions stabilize, but the range of outcomes remains wide. Closer to home, affordability has become the defining political issue heading into the midterm cycle. The administration is rolling out consumer-focused measures around housing costs, prescription drugs, and credit, which could benefit some sectors while creating headwinds for others. What This Means for Inflation The inflation picture is nuanced right now. If current disruptions prove temporary, the impact on consumer prices should remain limited. However, if tensions persist and energy prices stay elevated, we expect to see some upward pressure on inflation over time. It is worth keeping in mind that energy prices, while attention-grabbing, are historically less influential on long-term inflation than factors like wage growth and domestic demand. The broader U.S. picture reflects a tension between tariff-driven price pressure on one side and softening economic momentum on the other. The Fed is navigating this carefully, balancing inflation concerns against labor market signals. For now, rates appear likely to hold steady near term, with modest cuts possible later in the year if conditions warrant. How We're Thinking About Your Portfolio Volatility is uncomfortable, but it is not the enemy of long-term wealth building. History has demonstrated consistently that market disruptions driven by geopolitical events tend to be temporary in nature. Long-term investors are best served by staying anchored to their goals and risk parameters rather than reacting to the news of the day. This environment does reinforce several principles we apply in managing your portfolio: maintaining thoughtful diversification, ensuring fixed income allocations reflect your actual income needs, and being intentional about where inflation and energy exposure sits within your overall strategy. We are monitoring developments closely and will continue to adjust positioning as the picture becomes clearer. As always, if anything here raises questions specific to your situation, please reach out. That conversation is exactly what we are here for.
If you’ve been paying attention to the tax landscape this year, you already know the ground has shifted. New tax legislations signed into law last July made sweeping changes to the federal tax code—and for high-net-worth individuals and families, the implications are significant. Let’s cut through the noise and share what we think matters most. First, the seven-bracket individual rate structure from the 2017 Tax Cuts and Jobs Act is now permanent. That means the top marginal rate stays at 37 percent. For years, many of us were planning around the possibility that rates would snap back to 39.6 percent in 2026. That’s off the table. If you’d been accelerating income into prior years to avoid a potential rate increase, it’s time to reassess that strategy. Second, the standard deduction was made permanent at its elevated level. For most of our clients, this doesn’t change the calculus—you’re likely itemizing anyway—but it’s worth noting if you have family members in simpler tax situations. Third, and this is the big one for estate planning: the federal lifetime gift and estate tax exemption is now permanently set at $15 million per individual, indexed for inflation. No more sunset. For married couples, that’s $30 million you can transfer free of federal estate tax—and that number will only grow with inflation adjustments. If you’ve been hesitating on gifting strategies because of uncertainty around the exemption, that uncertainty is gone. There are also new wrinkles in the charitable deduction rules. Starting this year, itemized charitable deductions are only available for amounts exceeding 0.5 percent of your adjusted gross income, and the deduction is capped at 35 percent for taxpayers in the top bracket. That’s a meaningful change from the prior 60 percent AGI limit for cash gifts. If philanthropy is part of your wealth plan—and for many of our clients, it is—we need to rethink how and when you give. The SALT deduction cap has also been adjusted, rising to roughly $40,000 with phase-outs starting around $500,000 in modified AGI. For those of us in Texas, the lack of a state income tax softens this blow, but if you hold property in high-tax states, it’s still relevant. Here’s our takeaway after thirty years of doing this: certainty in the tax code is rare. When you get it, act on it. The permanent nature of these provisions gives us a genuine planning window. Let’s not waste it. If you haven’t reviewed your tax plan since last summer, let’s schedule a conversation.