As we approach the end of the year, life has a way of speeding up. Work projects need to be wrapped up, holiday plans come together and calendars fill with family gatherings and year-end events. Before you know it, the final two weeks of the year arrive, and it seems as if the entire country has collectively logged off until the new year.
In the financial planning world, the final two to three months of the year represent an important planning window. Not only is it a good time to solidify the decisions and strategies you’ve implemented throughout the year, but it’s also an opportunity to evaluate additional planning ideas that may only become clear once the year takes shape.
As you prepare for year-end, here are several areas of your financial plan worth reviewing.
Tax Planning: Identify Opportunities Before the Year Ends
- Update your year-end tax projection. Identify whether you’re on track with withholding, estimate your potential tax liability and uncover planning opportunities before the year closes.
- Evaluate Roth conversion opportunities. Converting a portion of a Traditional IRA to a Roth IRA may make sense during lower-income years. It can help reduce future Required Minimum Distributions (RMDs) while building tax-free assets.
- Consider proactive IRA withdrawals. Spreading IRA withdrawals across two calendar years can help manage the tax impact of large upcoming expenses, while withdrawals before RMDs begin may reduce future tax headwinds.
Retirement Planning: Make the Most of Your Contributions and Distributions
- Confirm all RMDs have been completed. Verify that all required distributions have been satisfied, paying particular attention to inherited IRAs, which may have different distribution requirements.
- Adjust employer retirement plan contributions. Review your 401(k), 403(b) or other workplace retirement plan contributions. Consider increasing them if your budget allows, especially as new contribution limits take effect.
- Review IRA contribution opportunities. Consider any remaining traditional IRA, Roth IRA and Backdoor Roth contribution opportunities. Keep in mind that eligibility and contribution deadlines can vary.
- Evaluate self-employed retirement plan funding. For business owners, year-end is a good time to review how much can be contributed to plans such as SEP IRAs and Solo 401(k)s, along with the applicable contribution and funding deadlines.
Charitable Giving: Align Your Donations With Your Tax Strategy
- Consider a Donor-Advised Fund (DAF). For individuals experiencing a particularly high-income year, making a larger charitable contribution to a Donor-Advised Fund may provide a meaningful tax deduction while allowing flexibility in when grants are distributed to charities.
- Explore “bunching” charitable contributions. With a high standard deduction, consolidating multiple years of donations into one year may result in a larger tax benefit while retaining flexibility in how and when you support charities.
- Review Qualified Charitable Distribution (QCD) opportunities. Individuals age 70½ and older may be eligible to donate directly from an IRA to a qualified charity. Eligible QCDs can also count toward satisfying RMD requirements.
Investment Planning: Review Your Portfolio and Tax Efficiency
- Review portfolio allocations. Year-end can be a good time to rebalance your portfolio and realign your investment allocation with your goals, risk tolerance and current circumstances.
- Assess tax-loss harvesting opportunities. Realizing investment losses may help offset capital gains and improve overall tax efficiency in certain situations.
Benefits and Insurance: Make Sure Your Coverage Still Fits
- Review open enrollment elections. Employers frequently update benefit offerings, costs and coverage options. Taking the time to review available choices can help ensure your selections still align with your needs.
- Evaluate HSA and FSA contributions. Health Savings Accounts and Flexible Spending Accounts can provide valuable tax advantages. Consider whether your contribution levels should be adjusted for the coming year.
- Revisit life and disability insurance coverage. A change in income, family circumstances or financial goals may warrant a fresh review of your protection strategies.
The end of the year isn’t just about checking items off a list. The best opportunities often emerge when planning begins before deadlines become urgent. That’s why we view year-end as an ideal time to discuss goals for the year ahead. Understanding what’s on your radar allows us to identify planning opportunities early and be more proactive throughout the year.
Financial Planning Works Best When Every Piece Fits Together
Financial planning is rarely about finding a single strategy that solves everything. Instead, it’s about coordinating multiple decisions in a way that supports your broader goals.
While any one of the strategies above may be worth considering, they can be more effective when paired with other strategies. Your income, tax situation, retirement timeline and personal goals all influence which strategies make sense in a given year. By coordinating with your financial advisor, CPA and other professionals, you can better identify opportunities and implement them thoughtfully and efficiently.
Start the New Year With a Clearer Financial Plan
As 2026 comes to a close, a thoughtful year-end review can help you identify opportunities, stay ahead of important deadlines and start 2027 with greater confidence. Hess Financial can help you coordinate tax planning, retirement strategies, investments and other key financial decisions. Contact our team to learn more about our financial planning services.
Hess Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
