While the 2026 tax filing season may not yet be on most clients’ radar, now is the time to start considering tax issues that will be relevant in the early months of 2026.
Some tax moves, in fact, must be completed before Dec. 31. Clients should be reminded that some tax planning strategies take time to execute and that it may be impossible to accomplish their goals if they wait until the last minute.
The end of the year is always a busy time, so clients and advisors should work to put plans in motion to avoid unpleasant surprises come April.
Catch-Ups, Rollovers and RMDs
Clients with the means should be sure that they’ve maxed out their pre-tax retirement plan contributions. The 2025 limit for 401(k) contributions is $23,500, although participants 50 and older can make an additional catch-up contribution of up to $7,500, with an enhanced catch-up contribution of $11,250 an option for clients aged 60–63.
Starting next year, clients earning more than $145,000 must treat their catch-up contributions as Roth contributions.
There is no hard Dec. 31 deadline for executing a rollover transaction, but clients should consider how late-in-the-year IRA rollovers affect their RMD obligations. Individuals who have reached their required beginning age — currently, between 70.5 and 73, depending on the client’s year of birth — must take a year-end distribution or incur penalties.
For clients taking a distribution that is meant for rollover before the end of 2025 with the funds not deposited into the receiving IRA until 2026, those amounts must be included when calculating the client’s 2025 RMD obligation. Failure to include the rollover funds can result in penalties.
Clients should receive an RMD notice from the IRA custodian by Jan. 31 of any calendar year they must take RMDs. The custodian should either provide the amount of the required RMD, based on the account balance as of Dec. 31 of the previous year, or offer to provide the calculation on request. When year-end rollover transactions remain in play as of Dec. 31, clients should remember that it’s possible that the IRA custodian’s calculation could be incorrect.
Roth Conversions
Taxpayers who believe that they’ll be in a high tax bracket during retirement may wish to evaluate a Roth conversion strategy to generate tax-free income during retirement. It’s important to consider the client’s current tax picture when executing a Roth conversion, to avoid pushing the client into a higher tax bracket.
For example, a single client earning $180,000 in 2025 falls into the 24% tax bracket. That client is able to convert up to $17,300 without entering the 32% tax bracket.
Charitable Giving Strategies & QCDs
Taxpayers can deduct cash donations to charities up to 60% of their adjusted gross income. Donations of appreciated long-term investment assets, such as securities, can be particularly valuable because the client won’t have to recognize long-term gain on disposition of the assets. Clients are entitled to deduct the full fair-market value of the donation, up to 30% of their AGI.
Clients at least 70.5 years old might want to consider giving via the qualified charitable distribution strategy to simultaneously minimize their taxable RMDs for the year.
Under rules governing QCDs, clients can direct up to $108,000 in IRA funds to charity. That donation is not included in the taxpayer’s income and, if conditions are satisfied, the donation counts toward the taxpayer’s annual RMD. The cap is per person, so married taxpayers can direct up to $216,000 to charity in 2025 so long as each spouse has an IRA.
Under the Secure 2.0 Act, taxpayers are allowed to make a one-time qualified charitable distribution of up to $50,000 from an IRA to a charitable remainder trust or charitable gift annuity. As with the traditional QCD option, the distribution will count toward the taxpayer’s annual RMD obligation without generating tax liability.
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