The holidays are a wonderful time of year, but you should still end the year strong. If you’re not careful, you could miss opportunities to save taxes or avoid penalties. You’ll want to highlight a few important things so you can rest easy knowing you made the most of the year.
Required Minimum Distributions
We recommend planning required minimum distributions (RMDs) well before they are, well, required. Depending on your age, account type, and account size, RMDs can be a big deal. If you don’t take your RMDs on time, you could be affected high fines up to 25%.
As a retiree, the days all seem to blend together, but the IRS is ruthless when it comes to tax season. December 31stst is an important deadline. To avoid paying too much tax or being subject to excise duties, you must withdraw money on time.
Accounts subject to RMDs
It’s also essential to make sure you calculate your RMD for each account subject to RMDs. For the most part, this refers to any non-Roth retirement account, such as a traditional 401(k), 403(b), 457, IRA, SEP IRA, SIMPLE, profit sharing plan, or other qualified retirement account.
Taken over accounts
Different, complex distribution rules apply to acquired accounts. Only recently did the IRS issues final ruling on inherited accounts. The rules may change depending on whether the original account owner started using RMDs and your relationship with the account holder.
In short, most accounts inherited by non-spouse beneficiaries will need to start using RMDs immediately and be emptied within 10 years.
Qualified Charitable Contributions
If you haven’t made a distribution for the year yet, you may be able to do so make a qualified charitable distribution (QCD) as your RMD. If you enjoy charity, this can be a fantastic way to achieve both goals. However, for your QCD to count as an RMD, it must be the first distribution of the year.
If you’ve already made a distribution for the year, you can still donate to charity, but any amount you’ve already distributed is considered taxable income. The easiest way to ensure you’re covered is to complete your QCD first before running any other distributions, especially if you want to use the QCD as your full RMD.
Tax saving strategies
Another important consideration before the end of the year is your tax savings strategies. This is especially important for retirees who will be 65 or older through the end of tax year 2028. With the new one changes from the One Big Beautiful Bill Actseniors have a much higher standard deduction.
What does this mean for you? It could be an excellent opportunity to shift gears strategies such as Roth conversions or make large purchases when tax treatment is more favorable. With the now permanent higher standard deduction, slightly expanded tax brackets of 10% and 12%, and the temporary “enhanced” senior deduction of $6,000 for every taxpayer over age 65, you can take out much more at a lower overall tax rate.
Roth Conversions
Roth conversions can be a very powerful tool for retirees. For a married couple where both spouses are over age 65, the additional $12,000 total deduction can make a real difference in the cost of converting part of your IRA to a Roth. A married couple could convert another $48,000 without adding additional taxes at the federal level.
Complete larger purchases
If you’ve been putting off a big purchase, like a new car or a kitchen renovation, the next few years may be the right time to make it. New Car prices don’t seem to be fallingbut if the cost you pay in taxes is lower, it can help. The costs of building materials is a bit more volatile, but appears to be leveling off.
Either way, it’s a good time to evaluate any major purchases you’ve been putting off that might require you to withdraw from your retirement accounts. If you have to withdraw the money for RMDs later, you might as well do it “at a discount,” so to speak.
Charitable donations
We’ve already talked about QCDs, but regular charitable giving is still a worthwhile cause. If you’re interested in donating to charity, this can be a good way to offset taxes or reduce your tax burden later. The The 2025 QCD limit is $105,000.
You can still itemize deductions and donate anyway. However, there are limits.
Review and reset your spending plan
The last thing anyone wants is to revise their budget. However, the end of the year is the best time to reset your budget for the following year. You can start planning health insurance changes, travel, and setting up your regular withdrawals. It may also be the best time to rethink your Social Security withdrawal strategy.
Medical coverage
It’s always a good idea to look for things like additional Medicare coverage during open enrollment season. This will help you determine your costs next year. You don’t want to be faced with any surprises if your insurance premiums increase.
Speaking of Medicare, when you turn 65, you definitely want to prepare to apply for Medicare. There are lasting consequences for waiting too long to register.
Planning trips
It’s also a good time of year to plan trips and put vacations on the calendar. You may even be able to lock in preferential prices for the entire year. In any case, you can start Set up Google notifications for flight deals.
Rethinking your Social Security withdrawal strategy
If you haven’t started drawing Social Security benefits yet, now is a good time to review your options. The way social security is calculated can be a little confusing, so give yourself plenty of time to think about what’s best for you.
If you want to create some “gap years” for other tax-saving strategies, you may want to wait a little longer before you start withdrawing. Every person’s situation is different, so you need to sort through the details and make the best decision for yourself.
Set up your retirement income withdrawals
Now is the perfect time to adjust your withdrawals from your retirement accounts for your daily living expenses. It’s better to have everything ready so you always have the money you need.
Tie a bow for the year
As you turn the page on another lap around the sun, you’ll want the peace of mind that you’ve left no stone unturned. Although they may seem arbitrary, annual deadlines have real consequences. We want you to end the year in a fun, joyful mood – without stressing about meeting a deadline or worrying that you’ve missed something.
If this all seems overwhelming, you’re not alone. It’s never too late to get help and ensure you’re on the path to an efficient and satisfying retirement. Reaching out to a financial planner, accountant, or other financial professional can be extremely helpful.
Always keep your eyes open for new opportunities, both this year and in the years to come. Cheers to a fantastic, tax-friendly and well-planned year!
This article reflects the insights and opinions of the author and is not a recommendation or endorsement of their views or services.
About the author
Clint Haynes, CFP®
We help you build a retirement with joy, purpose and peace of mind.
Clint Haynes, CFP®
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