Tip of the Month: 2026 Retirement Contribution Limits

Once again, January (or late December) is a good time to make sure your retirement contributions are on track to be maximized for the upcoming year, if cash flow allows. These thresholds are higher for 2026 than they were for 2025, so if you were already maximizing them in 2025, an adjustment may be necessary. In addition, there’s a new(er) law that allows those aged 60-63 to contribute an even larger amount. 

The new limits are $24,500 per year or $2,042 per month for those under the age of 50. For those who are over or will achieve the age of 50 during 2026, the limit is $32,500 for the year or $2,708 per month.    

Beginning in 2025, those who turned 60-63 by the end of the year are eligible for an increased “catch up” contribution. This would increase their annual maximum contribution to $35,750, or $2,979 per month. After age 63, the maximum is the $32,500 stated above. 

These limits apply to 401k, 403b, and 457 accounts. Making the adjustment as early in the year as possible, or in late December to be picked up on the first payrolls of January, will help to ensure you will hit the maximum by the end. Your Bluestem meetings where we look at your progress towards the maximum would be several months into the year, and could result in a “late” adjustment to get you on track for the maximum. 

Contact your HR, or payroll provider to make the adjustment. Or, if you are with the University of Illinois, you can make the adjustment at the following links:

403b: https://www.hr.uillinois.edu/benefits/retirement/403b/sra

457: https://www.hr.uillinois.edu/benefits/retirement/457/enroll

IRA and Roth IRA limits are increased for 2026 as well, with the under 50 maximum at $7,500 for the year and the 50 and over maximum at $8,600 for the year.

Tax Planning for Illinois Retirees and Pre-Retirees: Navigating the One Big Beautiful Bill

At Bluestem Financial Advisors, we believe that proactive planning starts with staying informed. Our commitment to clients goes beyond investment advice. We monitor tax and related legislative changes to help you understand what new laws and regulations mean for your financial life. Recently, we had the opportunity to share an overview of the most recent tax bill, the One Big Beautiful Bill Act (OBBA), with members of the State Universities Annuitants Association (SUAA). Here is a summary of what we covered, including key strategies and planning opportunities for retirees and pre-retires.

Overview of Tax Legislation Since 2017

We began with a broad overview of tax law changes since 2017, including the Tax Cuts and Jobs Act (TCJA) and the significant overhauls brought by the SECURE Act. These changes have shaped the retirement landscape, especially regarding how retirement accounts are treated after the owner’s death. The SECURE Act, for example, eliminated the “stretch IRA” for many non-spouse beneficiaries, requiring faster distributions and potentially higher taxes for heirs.

The OBBA: What’s New and What’s Extended

The One Big Beautiful Bill Act (OBBA) primarily extends the lower tax rates and higher standard deductions introduced by the TCJA, with new inflation adjustments. For retirees, the new “enhanced senior deduction” offers an additional $6,000 per person age 65+, though it phases out at higher incomes and is set to expire after 2028. We discussed how these provisions can impact your annual tax bill and why it’s important to review your filing strategy each year.

State and Local Tax (SALT) Deduction – Especially for Illinois Residents

The increased cap up to $40,000 on state and local tax (SALT) deductions can be a game-changer. We highlighted how this opens the door for “bunching” strategies: by timing property tax and charitable payments, you can maximize deductions in alternating years. This is especially relevant in Illinois and other states where property taxes and state income taxes are significant.

Charitable Giving Opportunities

We explored several ways to make your charitable giving more tax-efficient:

• Above-the-line charitable deduction (starting in 2026) for those who don’t itemize.

• Qualified Charitable Distributions (QCDs) from IRAs for those age 70½+, which can reduce taxable income, lower Medicare premiums, and help maintain eligibility for senior deductions.

• Why QCDs remain a powerful tool even as other charitable deduction rules change.

Roth Conversions: Leveraging Lower Tax Brackets

We highlighted how to utilize lower tax brackets before and early in retirement to avoid higher taxes later. By converting traditional retirement assets to Roth IRAs during lower-income years before Social Security and Required Minimum Distributions (RMDs) begin you can reduce future tax burdens and gain more flexibility in retirement income planning.

Social Security: An Overview and Impacts to Retirees

We provided an overview of recent Social Security changes, including the repeal of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). These changes mean higher Social Security benefits for many SURS retirees but also create new planning considerations. We cautioned those who receive retroactive payments that could affect their tax bracket or Medicare premiums.

Watch the full webinar for detailed examples and Q&A:

At Bluestem, we see a tremendous opportunity to integrate tax planning into our retirement and planning strategies. By staying ahead of legislative changes and thoughtfully coordinating your tax, investment, and income decisions, we help you maximize your resources and adapt your plan as your life evolves.

If you’re interested in a more integrated approach to tax and retirement planning, we invite you to schedule a conversation with our team. Let’s work together to build a strategy that’s as dynamic as your life.

Shaping the Future of Financial Planning: A Resident's Perspective

Last year, Bluestem published a blog highlighting our Financial Planning Residency Program, a two-year opportunity designed to bridge the gap between graduation and becoming a client-ready financial advisor. As a current resident, I’d like to share what the experience has meant to me personally.

Over the past year, the residency has allowed me to grow in ways that go far beyond technical knowledge. I have built financial plans, participated in client meetings, and learned the inner workings of firm operations, all while earning the experience hours required for the CFP® marks. I even passed the CFP® exam during tax season, an achievement made possible by the program’s structure and support.

The residency also encourages creativity and leadership. One highlight for me was leading a project to research and integrate AI notetaking into client meetings, improving both training and efficiency. Opportunities like this, where you can take ownership and make an impact, are one of the many benefits of working in a small, collaborative firm.

What truly sets Bluestem’s residency apart is the intentional mentorship and structured development. The environment is supportive and team-oriented, with every member invested in your success. By the end of two years, residents ideally graduate with their CFP® marks, meaningful client experience, and the confidence to step into an advanced advisor role.

For students or recent graduates, this program is more than a first job. It is a launching pad for a rewarding career in financial planning. If you are looking for a place to learn, grow, and make a lasting impact, Bluestem’s Financial Planning Residency is worth exploring.

Tip of the Month: Requesting Your Free Credit Report

It’s good practice to regularly review your credit report. Not only does it allow you to monitor your credit activity and notice any signs of fraud before it becomes a larger problem, but it will also keep you aware of your broader financial picture when it comes to the varied types of credit you are using. And, if you notice any errors in your report, you can take action to report them, so you are not negatively impacted by incorrect information.

How do I do it?

There are three main credit reporting agencies: Equifax, Experian, and TransUnion. They’ve joined forces on one website (https://www.annualcreditreport.com/) where you can put in one request and get a report from each agency. Despite the name of the website, the law has changed, and you can request a credit report once a week for free. You probably have better things to do than to do this on a weekly basis, and that amount of frequency probably isn’t necessary. However, a once-a-year review of your credit report is very reasonable. You also may want to request a report prior to purchasing a home or a car with credit.

What information will it give me?

Each of the three credit reporting agencies offers an example of what your credit report might show. They tend to contain these pieces of information:

• Personal information (name, phone, current and previous addresses, date of birth, social security number)

• Credit account information, including the type of account, when it was opened, the original balance, the name of the loan company, and payment history

• Collections – past due accounts that have been taken over by a collections agency

• Bankruptcies

• Inquiries – when an entity requests a credit report. A hard inquiry indicates a lender or creditor has reviewed your report after you’ve applied for a credit card, mortgage, or auto loan. A soft inquiry is typically when you are checking your report, or when a current creditor is reviewing your credit.

If you notice an error in reporting, you can contact the reporting agency to dispute it. The Consumer Financial Protection Bureau offers guidance on how to do this.

What if it appears there’s been fraudulent activity?

Last year we shared a Tip of the Month on how to deal with possible identity theft or a data breach. You’ll find helpful information there on how to contact the credit agencies and put a freeze on your account.

References:

https://www.usa.gov/credit-reports

https://www.transunion.com/how-to-read-your-credit-report

https://www.experian.com/blogs/ask-experian/credit-education/report-basics/understanding-your-experian-credit-report/

https://www.equifax.com/personal/education/credit/report/articles/-/learn/understanding-credit-report-history/

https://www.myfico.com/credit-education/whats-in-my-credit-report

Shaping the Future of Financial Planning: Inside Bluestem’s 2-Year Residency Program

At Bluestem, we’re not just passionate about providing top-tier financial advice — we’re also dedicated to shaping the future of financial planning. Our Financial Planning Residency program, launched in 2021, is a testament to this commitment. Designed as a two-year immersive experience, this residency is not only a unique training ground for aspiring financial planners, but also a strategic initiative to meet the evolving needs of our clients. 

Why We Created the Financial Planning Residency 

The financial planning profession is dynamic and growing, but the pool of skilled, fee-only financial planners is limited. We saw an opportunity to address this gap while supporting our firm’s growth by creating a program that cultivates the next generation of financial planners. By offering structured, hands-on training, we aim to enhance the quality of advice we provide to clients while helping launch the careers of promising professionals. 

This program serves as both a recruitment tool for emerging talent and a way to ensure our clients receive personalized, expert guidance as they navigate their financial journeys. 

What the Residency Offers 

The Financial Planning Residency is designed to develop a well-rounded, capable financial planner through a phased approach. Over two years, residents gain foundational technical skills and client-facing experience, ensuring they’re prepared to serve clients effectively and confidently. 

Year One: Foundational Experience 

In the first year, residents focus on learning the inner workings of financial planning. From supporting the creation of financial plans to mastering essential tools and processes, residents build the technical and operational skills needed to succeed. This phase is primarily back-office focused but lays the groundwork for a deeper understanding of client needs. 

Year Two: Client-Facing Development 

The second year transitions residents into more client-facing roles. They begin to lead client meetings, present financial strategies, and build relationships. This year is all about honing communication and leadership skills, preparing residents to not only offer advice but to guide clients with confidence. 

Graduation: What Comes Next? 

Upon completing the two-year residency, our residents have multiple paths forward. Some may choose to stay with Bluestem as full-time financial planners, contributing to our mission of delivering client-first advice. Others may use the experience, skills, and connections they have built during their residency to launch into the next phase of their careers, with Bluestem’s full support and network at their disposal. Whether they stay or move on, our goal is to help each resident succeed and thrive in the financial planning profession. 

Meet the Residents 

We are proud to highlight our current and past residents, each bringing a unique background and perspective to Bluestem Financial Advisors: 

• Sam Wesley – In the first year of his residency following a robust undergraduate education at the University of Illinois, Sam is already contributing positively to engagements with our clients. He is busy mastering the technical side of financial planning while starting to work on the intricacies of leading a client relationship. Read more about Sam on our website here. 

• Tim Lee – Currently in his second year, Tim has been a tremendous asset to the team and is focused on continuing to solidify his technical financial planning skills while focusing more on developing strong client relationships and leading financial planning sessions. Read more about Tim on our website here. 

• Sue Plisch – As many of you may remember, Sue started as an intern with our firm in 2020, helped develop and launch our Residency Program, and graduated from the program to start her own firm in 2023. She has always shown the ability to connect deeply with clients, bringing advanced relational skills to every interaction. Sue’s success story is a testament to the impact of the program and Bluestem’s commitment to fostering future leaders in financial planning. You can learn more about Sue and her new firm by checking out her firm’s website here.  

At Bluestem, we believe that nurturing the next generation of planners is crucial for the long-term success of both our clients and the profession. Our Financial Planning Residency is just one of the ways we are investing in that future, offering our clients the best of today’s expertise and tomorrow’s potential. 

If you or someone you know might be interested in our open position for June 2025, please check out our job posting!