Year-End Planning – Control the Chaos

Introduction

While the holiday season is consuming much of your time, it’s important that you don’t miss some important year-end tax deadlines.

Time’s Ticking

First, the year-end must-dos! These items have a hard deadline of December 31, so make sure you give yourself enough leeway to avoid running afoul of the powers that be.

Required Minimum Distributions (RMDs):

• Individuals age 73 or older who have IRAs, SEPs, SIMPLEs, and most employer-sponsored retirement plans are subject to RMDs.
• Changes have been made that require RMDs to be taken from inherited IRAs under the 10-year rule in certain circumstances.

Qualified charitable distributions:

• For those age 70.5 and older, qualified charitable distributions (QCDs) can be made if you don’t need the income. These distributions (made directly to the charity) can be made in conjunction with your RMD, helping to lower the taxable portion of your RMD.
• The 2025 limit for QCDs is $108,000.

Charitable Giving:

• If you are considering outright charitable gifts, ensure that checks are postmarked by year-end and that any stock/bonds are received by the charity before year-end. Note that there have been many changes in the deductibility of charitable giving, so it’s important to understand how and when to make these gifts.

Roth conversions:

• If converting traditional IRA or 401(k)/403(b) pre-tax funds to a Roth IRA, the conversion must be complete by December 31.

Capital Gain Harvesting/Recognition:

• If you have capital gains, it might make sense to sell some positions at a loss to offset those gains. If you are in a lower tax year, it could make sense to sell positions at lower rates and pay the resulting taxes now.

Employer-Sponsored Retirement Plans:

• Employee contributions must be made before the end of the year.
• SIMPLE IRA (for plans with less than 25 employees[KA1] ):
• Salary deferral: $16,500 ($20,000 if over 50 at year-end)
• “Super Catch-Up”: Additional $1,750 if between 60-63
• SIMPLE IRA (for plans with 25 or more employees):
• Salary deferral: $17,600 ($21,450 if over 50 at year-end)
• “Super Catch-Up”: Additional $1,400 if between 60-63
• 401 (k) / 403b:
• Salary deferral: $23,500 ($31,000 if over 50 at year-end)
• “Super Catch-Up”: Additional $3,750 if between 60-63

The Stress Can Wait

What about those items without hard, year-end deadlines? There are several items you can table until after the year, but before the tax filing deadline.

Retirement account and HSA contributions

Contributions to IRAs, Roth IRAs, health savings accounts (HSAs), and most self-employed retirement plans for tax year 2025 do not have to be made until the tax filing deadline in April 2026.

• The contribution limits are as follows:
• IRA/Roth IRA: $7,000 ($8,000 if over age 50 at year-end)
• SEP IRA: 25% of compensation up to a cap of $70,000
• “Super Catch-Up”: Additional $3,750 if between 60-63
• HSA: $34,300 for self-only coverage and $8,550 for family (Additional $1,000 if over age 55)
• 529 contributions (and reimbursements) – To be eligible for state tax credits or deductions in tax year 2025, 529 contributions can wait up until your tax filing deadline. Contributions by Indiana taxpayers qualify for a 20% tax credit, up to $1,500, on $7,500 in contributions [KA2].
• Q4 estimated tax payments – The final estimated tax payment for 2025 has a due date of January 15, 2026.

Considerations

Henry Adams proclaimed that “chaos was the law of nature; order was the dream of man”. There is nothing like the holiday season to evoke a sense of utter anarchy and disorder.

To that end, have a plan. Create your own order. Review those Christmas lists (checking them twice, of course), enjoy time with family, but be sure to have discussions with your financial and tax planners to ensure that you aren’t missing out on something that could impact your financial future. Happy Holidays!

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