Why Year-End Matters for Your Retirement Plan
Your federal tax return filed in April 2027 (or October 2027, if you utilize an extension) covers the preceding calendar year. That means every financial transaction completed before December 31, 2026, can still shape your 2026 taxes, while anything left undone after that date could be a missed opportunity.
Maximize Retirement Account Contributions as Able
If you still have access to tax-advantaged accounts, contributing before year-end (or, for IRAs, before the tax filing deadline) can deliver meaningful tax deductions now or tax free growth for the future. Contributing to retirement accounts can reduce taxable income, and reviewing tax forms early can prevent filing penalties. Here are the key 2026 tax year limits:
- 401(k), 403(b), 457 plans: Elective deferral limit of $24,500. Employer contributions have their own limit of $47,500, offering a total contribution limit of $72,000. Catch-up contributions for those aged 50 and older rise to $8,000; if you are 60 through 63, you qualify for a “super” catch-up of $11,250. Deadline: December 31, 2026.
- Traditional and Roth IRAs: Contribution limit of $7,500 ($8,600 including catch-up contributions for those 50 and older). Roth IRA eligibility phases out for those married filing jointly at approximately $242,000 to $252,000 in modified adjusted gross income. Deadline: April 15, 2027.
- Health Savings Accounts (HSAs): $4,400 for individual high-deductible health plan coverage; $8,750 for family coverage, plus $1,000 catch-up if age 55 or older and not yet enrolled in Medicare. Deadline: April 15, 2027.
- 529 College Savings Plans: No federal deduction, but many states allow a state income tax deduction or credit. Contribute by December 31 to count in the 2026 state tax year.
Tax deductions can lower your overall tax bill significantly, so confirm every eligible account is funded to the level that makes sense for your income and goals.
Required Minimum Distributions (RMDs)
If you are 73 or older, the IRS requires you to withdraw a minimum amount from Traditional IRAs, SEP/SIMPLE IRAs, and most employer-sponsored retirement plans each year. The deadline is December 31, and there is a penalty for missing an RMD, so it may be beneficial to confirm the distribution is properly taken before the holidays.
For those aged 70½ or older who wish to support charitable causes, a Qualified Charitable Distribution allows you to direct up to $100,000 per year from your IRA straight to a qualifying 501(c)(3) organization. The transfer satisfies part or all of your RMD without adding to your taxable income. QCDs must be completed before December 31 to apply to the 2026 tax year.
Charitable Contributions and Gifting
Charitable donations made before December 31, 2026, can reduce your taxable income. Cash contributions to public charities are generally deductible up to 60% of your adjusted gross income (AGI; essentially all your income before itemized deductions). Donating appreciated securities rather than cash can help you avoid realizing capital gains while still receiving a full fair-market-value deduction, but the deduction is limited to 30% of AGI. New for 2026, there is a 0.5%-of-AGI hurdle for the charitable contribution deduction. For example, if your AGI is $100,000 and you contribute $10,000 to charity, the hurdle is $500 (i.e., $100,000 x 0.5%) and your deductible contribution is $9,500.
Also new for 2026, for non-itemizers, cash charitable contributions up to $1,000 for single filers ($2,000 if married filing jointly) are fully deductible (non-cash contributions are not eligible).
For gifts to family members, the 2026 annual gift exclusion allows each individual to give $19,000 per recipient tax free, meaning a married couple can transfer $38,000 to each child or grandchild without filing a gift tax return. Gifts exceeding that annual threshold count against your lifetime gift and estate tax exemption, which stands at $15 million per individual ($30 million for a married couple) in 2026. If you exceed the annual exclusion, an IRS Form 709 must be filed by your tax filing deadline including extensions for the correct period.
Strategically Raising Taxable Income Through A Roth Conversion
After accounting for all the deductions and exclusions described above, you may find yourself in a relatively low tax bracket for 2026. If so, it may be beneficial to deliberately recognize more income now, while rates are favorable, rather than deferring it into future years when your tax situation could be less forgiving.
One common tactic for doing so is a Roth conversion, which involves moving Traditional IRA assets into a Roth IRA. This triggers taxable income in the conversion year, but future growth and qualified withdrawals are tax free. For married filing jointly in 2026, the 24% Federal income tax bracket extends to approximately $403,550 of taxable income, giving many affluent couples room to convert without reaching the highest marginal rates. To maximize the benefit of this strategy, you must have cash outside of your IRAs to pay the related tax liability. Conversions must be completed by December 31.
Financial Plan Review and (Potential) Refresh
The final months of the year are ideal for stepping back and evaluating whether your financial plan still reflects reality.
- Spending: Whether you underspent or overspent compared to your original projections, may indicate a need to revisit your plan and assess if your portfolio is constructed in the most ideal way to meet your spending needs.
- Investment performance: Underperformance relative to expectations early in retirement can have a long-lasting impact on the overall performance of your portfolio. This early shortfall may reduce the sustainability of your withdrawals and potentially require adjustments to your spending or investment strategy. Engaging with a CFP® professional can help determine whether your retirement goals should be shifted accordingly to maintain financial security and align with your evolving circumstances.
- Family changes: Family shifts such as divorce, remarriage, new grandchildren, or a child’s changing financial needs may indicate your plan needs to be updated to alter spending needs and/or shift how much you want to have left over to bequeath to others.
It can be helpful to sit down with a CFP® professional before the end of the year to confirm that you are on track to meet your goals, reassess how much money you truly need in retirement, and contemplate any necessary adjustments.
Estate Plan, Legacy, and Beneficiary Review
Year-end is a practical time to confirm that your wills, trusts, and beneficiary designations still match your family dynamics and legacy intentions. A divorce, a remarriage, the arrival of new family members, or the passing of a named beneficiary can all render existing documents outdated. It’s beneficial to verify designations to maintain accurate internal records to streamline your estate plan.
Specifically, review the following:
- Beneficiary designations on IRAs, 401(k)s, pensions, life insurance, and transfer-on-death accounts. These designations override your will, so errors can send assets to the unintended place if updates are not made.
- Core legal documents: Confirm that your will, any revocable living trusts, durable power of attorney, and advance medical directives are current.
- Coordination with financial strategy: Changes to your financial plan may necessitate corresponding adjustments to your estate plan, particularly based on the amount of wealth you are likely to have left to bequeath.
At Godsey & Gibb, our advisors help clients understand how end-of-year financial decisions will interact with eventual estate settlement and inheritance. That said, altering the legal documentation underpinning your plan requires an estate attorney. We coordinate closely with your legal counsel to ensure your portfolio and legal documents are aligned to common goals.
How Godsey & Gibb Can Support Your Year-End Planning
If all these tasks feel like a lot to manage on your own, you are not alone. Many affluent families find that handling the necessary financial affairs on their own requires valuable time they’d rather spend elsewhere. At Godsey & Gibb, our Wealth Advisors, CFP® professionals, and CPAs collaborate on setting financial plans, constructing and managing investment portfolios, executing year-round tax-efficiency tactics, and preparing annual income tax returns to help our clients reach their financial goals. Our clients can enjoy the holiday season knowing a team of professionals is helping them take advantage of every year-end opportunity.
If you would like a complimentary review of your portfolio, including tailored year-end tactics that may be suitable to your unique financial situation, please do not hesitate to reach out to us. Our team at Godsey & Gibb Wealth Management is here to provide personalized guidance to help you maximize your financial health as the year closes.