As the holiday season approaches and the year winds down, it’s the perfect moment to pause and take stock of your financial well-being. A little planning now can set you up for confidence and clarity in the new year. Use this checklist as a guide while you close out 2025 and get ready to step into 2026 on solid footing.
1. Boost Your 401(k) Before the Deadline
Your workplace retirement plan is one of the most effective ways to build long-term wealth. Try to contribute as much as you comfortably can—and be sure you’re getting the full employer match if one is offered.
For 2025, the 401(k) contribution limits are $23,500 per year, or $31,000 if you’re age 50 or older. If you are between the ages of 60 and 63, you are eligible to contribute up to $34,750. Check your payroll contributions or speak with your plan provider to confirm whether you need to make any last-minute adjustments before December 31.
2. Don’t Forget Your RMD
If you’re 73 or older, the IRS requires you to take a Required Minimum Distribution (RMD) from your tax-deferred retirement accounts, such as IRAs and 401(k)s. This ensures the IRS can begin collecting taxes on money that has grown tax-free for years.
Your RMD amount is tied to your account balance and life expectancy. Distributing more than the minimum is allowed, but missing the minimum can result in penalties. If you’re unsure whether you’ve satisfied your RMD requirement, check in with your CPA or plan sponsor sooner rather than later.
3. Look for Tax-Loss Harvesting Opportunities
Late in the year is a natural time to review your taxable investment accounts for any positions at a loss. Selling those positions can help offset capital gains—and potentially reduce your overall tax bill.
You can use losses to offset gains and deduct up to $3,000 from ordinary income if your losses exceed your gains. Work with your investment advisor or CPA to make sure this strategy fits within your larger financial plan.
4. Explore Whether a Roth Conversion Makes Sense
If you expect to be in the same or a higher tax bracket in the future, a Roth IRA conversion may be worth considering. Converting means paying taxes on the amount moved now, while allowing future growth and withdrawals to be tax-free.
These conversions must be completed by December 31, so reach out to your CPA or investment advisor to determine whether this strategy aligns with your goals for 2025 and beyond.
5. Use Up Remaining FSA Dollars
Flexible Spending Accounts (FSAs) generally operate under a “use it or lose it” rule. Check your balance and make sure you spend remaining funds on eligible expenses—think dental appointments, glasses, contacts, prescriptions, and other health-related costs.
If your employer offers a Health Savings Account (HSA) instead, or if you’re eligible to switch, HSAs can be a more flexible long-term tool because funds roll over each year.
6. Finalize Charitable Gifts Before Year-End
Charitable giving is a meaningful way to support causes you care about and may provide tax benefits if you itemize deductions. For reference, the 2025 standard deduction is $31,500 for married couples and $15,750 for individuals. Head of household is $23,625.
Charitable donations must be made by December 31st to count toward your 2025 taxes.
If you’re 70½ or older, consider a Qualified Charitable Distribution (QCD) directly from your IRA. QCDs can satisfy part or all of your RMD and are excluded from taxable income—a impactful benefit for many retirees.
7. Make Use of Annual Gifting Limits
The 2025 gifting limit allows you to give up to $19,000 per person (or $38,000 per couple) without filing a gift tax return. You may gift to as many individuals as you’d like within these limits.
Gifting can be a thoughtful way to transfer wealth during your lifetime and may help reduce the size of a future taxable estate.
For reference, the projected estate tax exemption for 2025 is $13,990,000 for individuals and $27,980,000 for married couples.
8. Get Ahead of Your 2025 Tax Planning
Before the year closes, touch base with your CPA or tax advisor for a preliminary tax review. This can help identify opportunities to reduce your tax burden or avoid surprises when filing season arrives.
If you prepare your own taxes, the IRS withholding estimator can help you gauge whether you’re on track or need adjustments.
9. Build Your Budget for 2026
A well-planned budget can make all the difference in helping you achieve your financial goals. Review your spending from 2025, assess what needs to change, and map out your priorities for 2026.
If you need support getting organized, explore budgeting tools or cash-flow worksheets that can help simplify the process.
Authored by Whelan Financial
Preliminary language, parameters, and edits for this blog were crafted by the Whelan Financial team, with the help of generative AI.
