With the end of the year approaching, it’s time to review your financial activity to make sure all necessary tasks have been completed. Because tax returns are based on the calendar year, certain transactions and tasks must be completed by Dec. 31 — otherwise, you may face consequences at tax time. Read on for a few exercises to complete now.
Review retirement account contributions
Have you been participating in an employer-sponsored retirement plan? If so, look at your total contributions year-to-date, and add any contributions you expect to make before year-end to ensure you haven’t over-contributed. In 2025, the maximum contribution to a 401(k) is $23,500. If you’re over age 50, you can make an additional catch-up contribution of $7,500, for a total of $31,000. These contributions must be made by Dec. 31. If you’re not on track to meet the contribution limit, consider increasing the amount you contribute for the remainder of the year.
If you also plan to make contributions into a different type of tax-deferred account, such as an IRA or HSA, you have until the tax filing deadline of April 15, 2026, to make those contributions.
Take your RMD
If you’re required to take a distribution from your retirement account, make sure to do so before Dec. 31 or you could face a tax penalty of up to 25% on the portion not taken (10% if corrected within two years). The amount of your distribution will change annually. Check your account statement for the amount, or use an online tool to calculate it.
Distributions are required from retirement accounts if you’re above a certain age. If you’re still working, you can generally delay distributions from your active employer-sponsored plan, but you’ll still be required to make a distribution from any other traditional retirement account that you may have. If you’re 73 or older, you’ve reached the required beginning age for required minimum distributions.
If you’re the beneficiary of an inherited IRA, you may be required to take a distribution from that account each year, even if you’re under age 73.
Make charitable donations
By making charitable donations throughout the year, you not only provide support to charitable causes but you may also receive a tax benefit. If you itemize your deductions, you may deduct the value of the donation up to a certain percentage of your adjusted gross income, depending on the type of donation and organization.
If you’re over age 70 1/2, you can make qualified charitable distributions from your traditional retirement account of up to $108,000 this year. Donations made directly to a 501(c)3 organization aren’t reported on your tax return, allowing you to avoid taxes on the distribution. For those taking RMDs, qualified charitable distributions offer an opportunity to fulfill philanthropic goals while lessening taxes.
Review capital gains, losses
If you’ve bought or sold securities in a taxable investment account this year, you may have realized capital gains or losses. Realized gains are taxable, but losses can be used to offset gains — as well as up to $3,000 of ordinary income — on your tax return. Unused losses can be carried forward and used in future years.
Plan for 2026
Now’s a great time to plan for the year ahead. In the time between year-end and Tax Day, will you make contributions to an IRA or HSA? Can you increase the contributions you make to your employer-sponsored retirement account next year? Will you have any losses to carry forward, and, if so, how can you use them to your benefit? If you anticipate any significant changes to your income or expenses, work with your CPA or financial advisor to determine whether strategic planning is needed.
Reviewing these financial items may allow you to anticipate the tax bill or refund you’ll receive in April, and planning now can help set you up for success in the year ahead.
Hannah Rogge is a wealth manager at Creative Planning (formerly Monterey Private Wealth). She welcomes questions you may have concerning investments, taxes, retirement or estate planning. Send your questions to: Hannah Rogge, 2340 Garden Road, Suite 202, Monterey, CA, 93940. Or you can email hannah.rogge@creativeplanning.com. This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.
