Closing in on Retirement? Make These 3 Tax Moves Before 2023

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.


  • If you are 50 or older, you can make catch-up contributions to your 401(k) or other similar workplace retirement accounts of up to $6,500 per year and $1,000 for an IRA.
  • Using a health savings account to pay for your medical expenses helps lower your overall healthcare costs.
  • Converting to a Roth IRA can be a good strategy if you think your tax rate will be higher in retirement.

New tax changes make a health savings account even more attractive.

If you're like most people, you probably don't give much thought to your taxes until it's time to file your return each April. But if you're getting close to retirement, it's worth taking a more proactive approach to tax planning. That's because the new tax laws that went into effect made some significant changes that could have a big impact on your financial bottom line in retirement.

1. Take advantage of catch-up contributions

If you're 50 or older, you can make catch-up contributions of up to $6,500 per year to your 401(k) or other similar workplace retirement accounts. This is in addition to the regular contribution limit of $20,500, bringing total possible contributions to $27,000. For 2023, the annual catch-up contribution limits increase to $7,500, and 401(k) contribution limits are increased to $22,500. This brings the total possible contributions for next year to $30,000 if you're 50 or older.

You can also make a catch-up contribution if you have a traditional or Roth IRA. You can make a $1,000 catch-up contribution on top of the standard $6,000 contribution limit, bringing your maximum to $7,000. This can be a great way to boost your retirement savings if you're behind where you'd like to be.

2. Contribute to a health savings account

A health savings account (HSA) is a tax-advantaged savings account that can be used to pay for qualified medical expenses. The maximum contribution amounts for 2022 are $3,650 for individuals and $7,300 for families. The catch-up contribution amount for individuals over 55 is $1,000. If you are getting close to retirement, there are several reasons why you should consider contributing to an HSA. First, contributions to an HSA are tax-deductible, which can help lower your taxable income.

Second, the money in an HSA grows tax-free, and any unused funds in your HSA can roll over to the following year. The money is yours forever, giving you complete control over it even if you switch to another job or to another plan.

Third, the money in your HSA will not be taxed when you use it for qualified expenses. The funds can be used to pay for Medicare premiums and other out-of-pocket medical expenses. Using pre-tax money for your medical expenses helps lower your overall healthcare costs. Best of all, after hitting 65, you can use the HSA money for non-medical expenses without a penalty.

3. Consider converting to a Roth IRA

With a traditional IRA, you get a tax deduction when you contribute but then pay taxes on withdrawals in retirement. With a Roth IRA, there are no upfront tax deductions for contributions, but withdrawals in retirement are tax-free. Converting a traditional or rollover IRA to a Roth IRA means you'll pay taxes on the account balance now but withdrawals in retirement will be tax-free. This can be a good strategy if you think your tax rate will be higher in retirement.

Plus, with a Roth IRA, your withdrawals in retirement are not subject to required minimum distribution rules (RMDs), which means you can let your money grow tax-deferred for as long as you want. This potentially leaves more money for your heirs, who will also get to benefit from the tax-free withdrawals throughout their lifetimes.

If you're getting close to retirement age, it's important to start thinking about how these tax moves can impact your financial plans. By taking advantage of catch-up contributions and health savings accounts and looking at a Roth conversion, you can help ensure that you'll be in good shape come tax time -- and beyond!

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow