Your 2025 Year-End Financial Planning Checklist: Don't Let These Opportunities Slip Away
- Christina McNeal
- Oct 7
- 8 min read
Updated: Oct 29
Perspective Matters
KEY TAKEWAYS
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Hard to believe, but it’s time to think about year-end planning. As we approach the end of 2025, please consider that the decisions you make in the next few weeks could have a significant impact on your financial situation for years to come. With ongoing changes in tax laws and economic uncertainty, sitting on the sidelines isn't just risky—it could cost you real money.
The good news? If you maintain a solid foundation and take action on a few key areas, you can navigate this uncertainty successfully. Think of it like weathering a storm: if you have two years of cash needs sitting safely in liquid accounts, you can ride out the rough patches with confidence.
WHY YEAR- END PLANNING MATTERS MORE THAN EVER
Between now and December 31st, you have a limited window to make strategic moves that can:
Reduce your tax bill for 2025.
Boost your retirement savings.
Position yourself for long-term financial success.
Take advantage of opportunities that disappear after December 31st.
Whether you're managing your finances yourself or working with a professional like a Certified Financial Planner®, these are important year-end strategies for you to understand and consider. These are some I think are most important.
SMART TAX MOVES FOR RETIREMENT ACCOUNTS
One of the biggest areas where people can save money involves their retirement accounts. Your strategy should depend on where you expect your income to go in the future.
IF YOUR INCOME WILL INCREASE IN THE FUTURE
If you're expecting your income to grow in the coming years, now is the time to think about Roth accounts. Consider these strategies:
Make Roth IRA and Roth 401(k) contributions. You pay taxes at your current rate, then enjoy tax-free withdrawals in retirement when your income (and tax rate) might be higher.
Consider Roth conversions. This powerful strategy involves converting traditional IRA money to a Roth IRA. You'll pay taxes now on the converted amount, but all future growth and withdrawals will be completely tax-free. This is especially valuable if you're currently in a lower tax bracket than you expect to be in retirement.
If you're age 59 ½ or older, accelerate traditional IRA withdrawals. Take some money out now to "fill up" the lower tax brackets. This is particularly smart if you're not yet taking required minimum distributions but expect to be in a higher tax bracket later. Every dollar you withdraw at 24% today is a dollar you won't have to withdraw at 32% or higher tomorrow.
Check if your employer offers Roth matching contributions. Some employers now allow you to elect Roth treatment for their matching contributions, giving you even more tax-free growth potential.
IF YOUR INCOME WILL DECREASE IN THE FUTURE
If you're planning to retire soon or expect your income to drop, a different approach makes sense:
Focus on traditional IRA and 401(k) contributions. You get a tax break now when you're in a higher bracket, and you'll pay taxes later when your rate is lower.
Delay Roth conversions. Wait until your income drops to convert traditional IRA money to Roth accounts, when you'll pay taxes at a lower rate.
UNDERSTANDING REQUIRED MINIMUM DISTRIBUTIONS (RMDS)
If you're required to take RMDs, make sure you understand these important rules:
Traditional IRAs: You can combine RMDs from multiple traditional IRAs and take the total from just one account, keeping things simple.
Inherited IRAs: RMDs from inherited IRAs cannot be mixed with your own traditional IRAs. Each inherited IRA must be calculated separately.
Employer plans: RMDs from 401(k)s and similar plans generally must be calculated and taken separately from each plan, with no aggregation allowed.
Exception for 403(b) plans: If you have multiple 403(b) accounts, you can aggregate those RMDs and take the total from one account.
THE POWER OF ROTH CONVERSIONS
Roth conversions deserve special attention because they're one of the most powerful retirement planning tools available.
When you convert traditional IRA money to a Roth IRA, you're essentially prepaying the taxes on that money at today's rates. This makes sense in several situations:
You're currently in a lower tax bracket than you expect to be in retirement.
You have a year with unusually low income.
You want to reduce future RMDs and their tax impact.
You want to leave tax-free income to your heirs.
You're concerned about future tax rates increasing.
The key is finding the "sweet spot"—converting enough to use up lower tax brackets without pushing yourself into a higher bracket unnecessarily. This is where working with a Certified Financial Planner® who specializes in retirement planning can really pay off.
MAXIMIZE YOUR SAVINGS BEFORE YEAR END
If you have room in your budget to save more, the end of the year is the perfect time to boost your contributions. Here are your key opportunities:
Employer Retirement Plans:
Maximum contribution: $23,500 for 2025 (plus catch-up contributions if eligible).
Check with your employer about making last-minute increases.
Every dollar you add could reduce your taxable income and grows tax-deferred.
Health Savings Accounts (HSAs):
Individual coverage: up to $4,300.
Family coverage: up to $8,550.
Additional $1,000 if you're 55 or older.
Triple tax benefit: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.
529 Education Savings Plans:
Gift up to $19,000 per beneficiary without triggering gift taxes.
Or make a lump sum contribution of up to $95,000 and spread it over five years for tax purposes.
Recent rules even allow transferring unused 529 funds to the beneficiary's Roth IRA (restrictions apply).
TAX-SMART STRATEGIES
If you have investments in taxable accounts (not retirement accounts), year-end is the time to review them for tax-saving opportunities.
Tax-Loss Harvesting
Do you have any investments showing losses? Selling them before year-end can provide valuable tax benefits:
Offset any capital gains you've taken during the year.
Use up to $3,000 to reduce your ordinary income if losses exceed gains.
Carry forward any remaining losses to future years.
Critical Tax Thresholds to Watch
Small changes in income or deductions can have big tax impacts. Pay attention to these important thresholds:
The 24% to 32% Bracket Jump:
Single filers: $197,300.
Married filing jointly: $394,600.
Strategic planning could keep you in the lower bracket and save thousands.
Higher Capital Gains Rate:
Single filers: $533,400.
Married filing jointly: $600,050.
Above these amounts, long-term capital gains are taxed at 20% instead of 15%.
Net Investment Income Tax:
Single filers: $200,000.
Married filing jointly: $250,000.
Additional 3.8% tax on investment income above these thresholds.
Strategic timing of investment sales can help manage this tax.
IRMAA Surcharges for Medicare:
Your income from two years ago determines your Medicare Part B and Part D premiums.
Managing your income carefully can help you avoid higher premiums.
Review the full checklist on my website for detailed IRMAA thresholds.
GIVE STRATIGICALLY AND SAVE ON TAXES
If you support charities, you have opportunities to maximize the tax benefits of your giving.
Tax-Efficient Giving Strategies
Donate Appreciated Securities:
Give stocks or mutual funds instead of cash.
Get a deduction for the full market value.
Avoid paying capital gains tax on the appreciation.
Win-win for you and the charity.
Qualified Charitable Distributions (QCDs):
Available if you're 70 ½ or older.
Give directly from your IRA to charity.
Counts toward your RMD but doesn't increase your taxable income.
Can donate up to $100,000 per year.
Bunching Contributions:
Best for those taking the standard deduction ($15,750 single, $31,500 married).
Instead of giving $5,000 annually, donate $15,000-$20,000 every few years.
Contribute to a donor-advised fund for flexibility.
Itemize deductions in bunching years, take the standard deduction in others.
Don't Forget These Other Year-End Items
Flexible Spending Accounts (FSAs)
Before December 31st, check your FSA balance:
Some employers allow up to $660 rollover to next year.
Others provide a grace period until March 15th to spend funds.
Most give you 90 days to submit receipts from the previous year.
Don't leave money on the table.
Health Insurance Deductibles
If you met your deductible this year:
Schedule needed medical procedures before year-end.
Buy necessary medical supplies or equipment.
Take advantage of lower out-of-pocket costs before your deductible resets.
Business Owners
If you own a business, consider these strategies:
Review Qualified Business Income Deduction eligibility.
Time business expenses strategically to optimize tax liability.
Evaluate Roth vs. traditional retirement plan contributions.
Note: Many retirement plans must be opened before year-end (exceptions for certain solo 401(k)s and SEP IRAs).
TAKE CONTROL AND GET PROFESSIONAL HELP
These strategies represent just some of the planning opportunities available before year-end.
Here's what I want you to understand: with tax laws changing and economic conditions shifting, doing nothing is actually a risky choice. But you don't have to feel overwhelmed. Whether you decide to tackle these issues yourself or work with a qualified professional like a Certified Financial Planner®, the important thing is to take action.
Remember that fundamental principle I mentioned at the start: keep two years of cash needs in safe, liquid accounts. This cash buffer gives you the stability to make smart long-term decisions without being forced to sell investments at the wrong time. It's your financial shock absorber during uncertain times.
As we head into the final weeks of 2025, I encourage you to review the full year-end checklist on my website and identify which items apply to your situation. Some moves require action before December 31st, while others need to be implemented early so they're in place when you need them.
The difference between those who thrive financially and those who struggle often comes down to whether they take advantage of available opportunities. Don't let 2025 end without making the moves that could benefit you for years to come.
Certified Financial Planner™ professionals are fiduciaries, putting your interests first at all times. We can help you look at your entire financial life holistically and help you build a plan flexible enough to withstand what the next few years will bring.
If you'd like to discuss your specific situation and concerns, please feel free to schedule a conversation using the link below.
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Neither Prism Planning and Solutions Group nor Insight Advisors provides tax or legal advice, and nothing in this communication should be treated as such. This communication should not be interpreted as a recommendation for a specific investment, legal or tax-planning strategy. We provide this material for informational purposes only. We have made every attempt to verify that the information contained in this communication is accurate as of the date published but make no warranties. Before making any decisions related to your own tax, legal and/or investment situation you should consult the appropriate professionals.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
