I swear the calendar speeds up after Halloween. One minute you’re handing out candy, the next you’re wondering how Thanksgiving came and went so fast. And then, like clockwork, people start getting that nagging feeling that there might be some financial housekeeping they should take care of before the year wraps up. They may not know exactly what those things are yet, but the instinct is there.
So let’s talk through the six big moves we should pay attention to this time of year, with enough time to actually make a difference before December 31st. In fact, we’re going to avoid most of the technicalities and specific strategies in this piece, and instead just drive the point home that you can’t ignore these things. Just give them a little attention before the year closes and your future self will be very pleased with you. And your future self is someone you definitely want on your side!
1. Maxing out retirement contributions
If you have access to tax advantaged retirement accounts, this is where I like to start before December 31. I mean workplace plans such as 401(k), 403b or most 457b plans, individual IRAs and HSAs if you are eligible.
There are three main consequences if you routinely come in well below what you reasonably could contribute.
First, you may be paying more current year tax than necessary, because dollars that could have gone into a pre tax 401(k) or HSA are sitting in a taxable account or just flowing through your checking account. That can mean higher income tax today, without any extra long term benefit.
| Account type | 2025 limit under 50 | 2025 limit 50 plus |
|---|---|---|
| 401k, 403b, most 457b employee salary deferral | $23,500 | $31,000 including $7,500 catch up |
| Traditional or Roth IRA total annual contribution | $7,000 | $8,000 including $1,000 catch up |
| HSA self only coverage | $4,300 | $5,300 including $1,000 catch up at 55 plus |
| HSA family coverage | $8,550 | $9,550 including $1,000 catch up at 55 plus |
Second, you’re shrinking the base that compounds for you inside the account. When you underfund a tax advantaged account year after year, it is not just that one year that is smaller. Every future year starts from a lower base.
Third, if your workplace plan offers a match and your contribution rate is low enough that you are not capturing the full match, that is compensation you simply didn’t take. The market can go up or down. The match is the rare place where the math is very lopsided in your favor.
The Compound Cost of Underfunding
Growth using actual 401(k) contribution limits from 2005-2025 at 10% annual return
I’m not saying everyone should squeeze every last dollar into every account, no matter what. Cash flow, debt, upcoming expenses, risk tolerance, all of that matters. What I am saying is that before the year ends, it is worth looking at your actual contribution percentages and asking a simple question: given my income and budget this year, am I taking full advantage of the retirement accounts available to me, or am I leaving long term benefits on the table?
2. Tax-loss harvesting
This is the part that feels a bit like a magic trick. Except it’s not magic, it’s just the tax code written in a way that occasionally gives you a perk when your investments have a bad run. Tax-loss harvesting is the process of realizing capital losses to offset gains. You sell an investment that’s down, recognize the loss, and then reinvest in something similar (not identical, or the IRS will have a word with you because of wash-sale rules).
Tax-Loss Harvesting in Action
How realizing losses can reduce your tax bill
Without Tax-Loss Harvesting
With Tax-Loss Harvesting
This isn’t “let’s hope for losses so we can harvest them.” No one wants losses, and we certainly shouldn’t hope for them! But if the market gave you a lemon this year, the loss can offset capital gains and even reduce up to three thousand dollars of ordinary income in a given year. And unused losses can carry forward. For people with large taxable accounts, this is one of those subtle levers that can save real money over long periods.
The rules are precise, so this is one you generally don’t want to improvise on your own.
3. Roth conversion analysis
This is the move that sounds simple from the outside but hides a surprising number of gears. Should you convert something to Roth before December ends? The only honest first answer is “maybe.”
A Roth conversion means taking money from a pre-tax account like a traditional IRA and moving it into a Roth IRA. The catch is that the amount you convert becomes taxable income this year. You pay tax now so that the future growth is tax-free. That can be powerful, especially when tax rates are relatively low or when you expect higher income in future years.
Where it gets interesting is in the analysis. Tax brackets. Medicare premiums. Social Security taxation. Phase-outs for deductions or credits. Required Minimum Distributions later in life. Future tax law changes. Market conditions. Every conversion is a puzzle. Interesting at times, frustrating at others, but always a puzzle worth solving!
Finding Your Roth Conversion Sweet Spot
See how far you can convert in 2025 before your income moves into a higher tax bracket.
Strategic Conversion
Aggressive Conversion
Sometimes people assume Roth conversions are only useful for high earners or only useful for younger people. They’re useful whenever the math works, and the math changes year to year. When markets are down, conversions become more attractive. When someone has a weirdly low-income year, it becomes attractive. When you’re edging into a higher bracket but not quite there, it becomes attractive. When RMDs loom in your seventies, it becomes attractive to shrink that future liability.
That’s why we should run these calculations fresh every year. December is a good time for it because we know what the year looked like. We know the projected income. We know the portfolio values. And if it makes sense, the conversion has to be done by December 31.
4. Charitable giving strategies
This is the time of year when charitable impulses and tax strategies overlap. And while I’m never going to suggest doing good only for a tax deduction, if you’re already planning to give, you might as well do it in the smartest way available.
One approach is called bunching. It means grouping several years’ worth of charitable gifts into a single tax year so that you exceed the standard deduction and itemize. Then the following years you take the standard deduction again. This works especially well when someone wants to make gifts eventually but doesn’t need the tax break every single year.
Charitable Bunching: Give Smarter, Save More
How concentrating donations in one year can increase your tax benefit
Without Bunching
With Bunching
Another approach is using a donor-advised fund. It lets you make a charitable contribution now, take the deduction now, and then distribute the money to charities over time. You can invest the assets in the fund while you decide. Think of it like setting up your own little charitable reservoir. This is especially useful in high-income years or in years when investment gains create a higher tax bill that you want to offset.
And then there’s gifting appreciated securities. Instead of selling an investment with a gain and paying tax, you donate the security directly and the charity receives the full value. As a bonus, you avoid the tax on the appreciation.
The only rule that matters for this article is that the gift must be complete by December 31 for it to count. Checks need to be mailed and shares need to be transferred by then. The clock is ticking!
5. Required Minimum Distributions
Now we get into an area that causes more confusion than almost anything else I deal with in December. RMDs. The government requires withdrawals from certain retirement accounts once you hit age 73. They don’t ask. They tell. And if you miss the deadline, the penalty used to be so painful that clients would turn pale just hearing it. Thankfully the penalty is lower now, but it’s still something you do not want to play around with.
The rule applies to traditional IRAs, SEP IRAs, SIMPLE IRAs, and most workplace retirement plans. Roth IRAs and 401(k)s are not subject to RMDs during the owner’s lifetime. The calculation is based on account balances on December 31 of the previous year, and the withdrawal must be taken by December 31 of the current year. The exception is the first RMD, which can be delayed until April 1 of the following year. But for most people, delaying that first one just means doubling up next year.
Required Minimum Distributions: The Unavoidable Tax Bill
How RMDs force withdrawals and increase over time
Your RMD Requirement Grows Each Year
RMDs actually serve a (not in your favor) purpose; they prevent pre-tax accounts from growing tax-free forever. But with good planning, they can be integrated into a broader income strategy that reduces surprises.
Sometimes the smart move is to take the RMD early in the year. Sometimes it’s taking it in December. Sometimes it’s converting part of the account before you even reach RMD age to keep future RMDs manageable. But the main thing is hitting the deadline.
6. Reviewing beneficiary designations
This is the item that can actually have the biggest consequences. Every year I remind people to review their beneficiary designations because life changes. Marriages. Divorces. Children. Grandchildren. People fall out of touch. People pass away. And yet the forms sit unchanged.
Beneficiary designations override your will. If you wrote a big, beautiful will drafted by the best estate attorney in the county but never updated the beneficiaries on your retirement accounts, the account goes to whoever is listed. Even if you meant to change it. Even if your family knows what you would have wanted. The form always wins!
Imagine remarrying, and years later, you fully intend for your current spouse to inherit a retirement account, but you’ve never updated the old form. When you pass, the account legally goes straight to your ex spouse from twenty years ago. The institution simply follows the form on file, because that’s what the law requires.
Your Annual Beneficiary Designation Checklist
Five minutes now can prevent years of unintended consequences
Accounts to Review
Check beneficiary designations on all of these accounts
So every December, look at your accounts just to make sure nothing surprising happened in the last twelve months. Not because you expect accidental mischief, but because oversight is easy, and this is one of the easiest fixes in all of financial planning. Five minutes of checking can prevent years of unintended consequences.
In Conclusion
When I look at all six of these year-end moves in one sweep, they don’t look dramatic. They don’t feel like the kind of things that get splashy headlines. But this is the core of what good planning looks like, a willingness to spend a little time each year tidying the corners before the calendar flips.
I get it. The end of the year is noisy, with holidays, family, work deadlines, and travel all bearing down on you like a freight train. But your financial life doesn’t care much about the noise of that freight train approaching. The rules stay the rules, the deadlines stay the deadlines, which makes this the perfect moment to give your future self a gift. A calm, organized, well-tuned financial transition into the new year.
If you want to walk through your situation and see which of these moves matter most for you this year, we’re here. This is what we do, and we genuinely enjoy helping people put the pieces together.
Click the button below and we’ll talk it through.
