What Issues Should I Consider Before the End of the Year?
What Issues Should I Consider Before the End of the Year?
Year-end is the last chance to take action on time-sensitive financial planning opportunities. From harvesting investment losses and completing RMDs to funding retirement accounts and making year-end gifts, the decisions you make before December 31 can have a meaningful impact on your tax bill and financial plan. This checklist ensures you don’t leave any opportunities on the table.
Tax Planning Issues
- Tax loss harvesting: Do you have unrealized losses in taxable accounts? Realize losses to offset gains and/or write off up to $3,000 against ordinary income. Watch for wash-sale rules.
- Capital gain distributions: Do any taxable investments face year-end capital gain distributions? Review strategies to minimize tax liability before distributions are declared.
- RMDs: Ensure all required minimum distributions from IRAs, inherited IRAs, and employer plans have been satisfied by December 31. Consider aggregating RMDs from multiple IRAs but note that RMDs from inherited IRAs cannot be aggregated with traditional IRAs.
- Income trajectory planning: If income will increase in the future, consider Roth IRA and 401(k) contributions, Roth conversions, and after-tax 401(k) contributions. If income will decrease, prioritize traditional pretax contributions.
- Capital loss carryforwards: Review any carryforwards from prior years. Look for opportunities to realize offsetting gains or use the $3,000 ordinary income offset.
- Tax bracket management: Are you near a bracket threshold? Key thresholds: $201,775/$403,550 (24%/32% boundary), $545,500/$613,700 (15%/20% LTCG boundary), $200,000/$250,000 MAGI (3.8% NIIT threshold), and IRMAA surcharge levels.
- Charitable giving: If taking the standard deduction, consider bunching gifts or using a Donor Advised Fund. Tax-efficient options include gifting appreciated securities or making a QCD if age 70.5 or older.
- Expected windfalls: RSU vesting, stock options, bonuses? Review withholdings and determine if estimated payments are required.
- Business owners: Review QBI deduction eligibility. Consider Roth vs. traditional retirement contributions. Defer or accelerate business expenses strategically. Many retirement plans must be opened before year-end.
- Marital status changes: Your marital status as of December 31 determines your filing status for the entire year.
Cash Flow and Savings
- Max out retirement accounts: 401(k) limit is $24,500 (plus catch-up if eligible). Check with your plan provider on timing for changes.
- HSA contributions: $4,400 (individual) / $8,750 (family) / +$1,000 if age 55+.
- 529 contributions: You can contribute up to $19,000 per beneficiary gift tax-free, or make a lump sum of up to $95,000 using 5-year gift averaging.
- FSA balance: Review your FSA balance. Options vary by employer: rollover up to $680, grace period through March 15, or 90-day receipt submission window.
- HSA deductible: If you’ve met your annual health insurance deductible, consider incurring additional medical expenses before year-end while coverage is active.
Estate Planning
- Have there been changes to your family, heirs, or assets? Review your estate plan and beneficiary designations.
- Complete any planned annual exclusion gifts before December 31. The 2026 annual gift exclusion is $19,000 per donee.
Other Issues
- If you have high school students planning for college, consider financial aid strategies that involve managing income in the years leading up to enrollment.
- Review whether any new laws will take effect in the coming year that might impact your plan.
Download the Year-End Financial Planning Checklist
Get the complete year-end checklist covering tax planning, investments, retirement contributions, charitable giving, FSA deadlines, 529 contributions, estate planning, and more. Use it with your advisor before December 31.
DOWNLOAD THE CHECKLIST