Smart Money Moves Before Year-End

As 2025 winds down, now is the perfect time to make strategic financial decisions that can lower your tax bill, grow your investments, and set you up for a strong start to 2026. Many of these opportunities disappear when the clock strikes midnight on December 31st, so acting now can make a meaningful difference in your long-term financial health.

Below are six smart strategies to consider before year-end:

1. Max Out Your Retirement Contributions

If you’re still working, review how much you’ve contributed to your 401(k), 403(b), or IRA this year.

For 2025, the contribution limits are:

401(k) / 403(b): Up to $23,500 (plus a $7,500 catch-up if you’re age 50 or older)

Traditional & Roth IRAs: Up to $7,000 (or $8,000 if age 50+)

Increasing your contributions before December 31st not only helps build your retirement savings but can also reduce your taxable income if you contribute to a pre-tax account.

If you’re unsure whether you’re on track, check your most recent pay stub or retirement plan portal and adjust your contribution rate accordingly.

2. Consider a Roth Conversion

If you expect your income to be lower this year or anticipate being in a higher tax bracket in retirement, a Roth conversion could be a valuable move.

This strategy involves transferring funds from a Traditional IRA to a Roth IRA and paying taxes now in exchange for tax-free growth and withdrawals in the future.

A Roth conversion can also help diversify your retirement tax exposure, giving you more flexibility in managing income and taxes later on. Please note that this must be completed by December 31st to be counted for the 2025 tax year.

3. Review Your Investment Portfolio

Year-end is an ideal time to review your investment mix and ensure it remains aligned with your goals and risk tolerance. Market fluctuations throughout the year can disrupt your allocation's balance.

Rebalancing: selling positions that have grown and reinvesting in underweight areas can help keep your portfolio on track. You may also consider harvesting investment losses to offset capital gains and reduce taxable income.

4. Use Up Flexible Spending Account (FSA) Funds

If you have a health or dependent care FSA, check your balance and spend down any remaining funds before the deadline. Many FSAs operate on a “use it or lose it” basis, meaning unspent dollars may be forfeited after year-end.

Eligible expenses can include medical copays, dental visits, prescription glasses, and certain over-the-counter medications.

5. Make Charitable Contributions

Giving back is rewarding, and it can also provide a tax deduction if you itemize.

You can donate cash, appreciated securities, or even make a Qualified Charitable Distribution (QCD) directly from your IRA if you’re age 70½ or older.

QCDs can satisfy part or all of your Required Minimum Distribution (RMD) while excluding the amount from your taxable income. A win-win for both you and the organization you support.

6. Plan for Required Minimum Distributions (RMDs)

If you’re age 73 or older (or inherited a retirement account), you may need to take Required Minimum Distributions before year-end. Missing an RMD can result in a hefty penalty: up to 25% of the amount that should have been withdrawn.

If you don’t need the income, consider strategies to minimize the tax impact, such as directing part of your RMD to a charity via a QCD.

The Bottom Line

A little planning now can lead to meaningful savings later. Whether it’s topping off retirement accounts, fine-tuning investments, or making strategic gifts, taking these steps before year-end can strengthen your financial foundation for years to come.

If you’d like to review your options or discuss which strategies make sense for your situation, connect with your financial advisor before November 30th to ensure there’s time to implement any changes.