In the hustle and bustle of the end of the year, it’s important to include one critical thing on your to-do list—a financial check-in. The end of year offers many great opportunities to set yourself up for success the following year, so it’s a great time to revisit your financial goals to make some changes, identify ways to save more and check in on your progress and spending. In addition, now is the time to talk with a financial advisor about any goals you want to work toward in the next year.

Here, we’ve outlined what you should know and some strategic actions to take that could help you optimize your retirement, finances and goals for the year ahead.

1. Consider maxing out your annual retirement contributions

What to know

Each tax-advantaged retirement account has unique rules for contributions and income limits. The 2025 contribution limits for some of the most popular retirement tax-advantaged accounts are as follows:

  • Individual retirement accounts (IRAs) and Roth IRAs:
    • $7,000 per person
    • You can add an additional $1,000 “catch-up” contribution if you are 50 or older
  • 401(k):
    • $23,500 per person
    • For those 50 and older, you can contribute an additional $7,500
    • If you are between 60-63, you can contribute an additional $11,250

You have until December 31 of each year, to contribute to your employer plan (although SIMPLE and SEP-IRA contributions are allowed until the extension date if one is filed). However, you have until April 15 the following year to contribute to your traditional or Roth IRAs.

Actions to take

Consider increasing contributions to your employer-sponsored retirement plan and/or IRAs. Not only will contributions made now boost your retirement savings balance, but pre-tax contributions can also help lower your tax bill. If your employer plan allows, automate your annual contribution increases with your plan administrator.

2. Consider a Roth, partial Roth, or backdoor Roth conversion

What to know

Roth IRAs offer both tax-free growth and tax-free distributions (once you have reached age 59½ and you’ve held the account for a minimum of five years). Since there aren’t any required minimum distribution (RMD) requirements for Roth IRAs, this account is even more attractive once you have reached the distribution phase.

Actions to take

Typically, you know which tax bracket you’ll be in at the end of the year.  If you expect to be in a lower bracket than usual, it might be a good time to consider a Roth conversion. This involves converting pre-tax retirement assets (e.g., traditional IRA or pre-tax 401(k)) to a Roth IRA or Roth 401(k). When you do so, you will owe taxes on the converted funds for the year when the conversion takes place.

If you are in a lower tax bracket, you’ll typically have a lower tax burden associated with the converted funds for that year. It’s beneficial to pay any taxes due on the conversion from money held outside your IRA account to maximize the conversion, allowing more funds to grow inside the account tax-free.

Even high earners who are typically ineligible to contribute to a Roth IRA due to income restrictions can benefit from a “backdoor” Roth IRA. A backdoor Roth is a strategy that allows you to make post-tax contributions to a traditional IRA and then convert those funds to a Roth IRA. Again, this process can create additional tax liability up front, but under the right circumstances, it may still be a benefit over the long-term. Prior to implementing this strategy, it is important to consult with your financial advisor to avoid the pro-rata rule.

A Roth conversion or a backdoor Roth must be completed by Dec. 31 to qualify for the current tax year.

3. Consider taking your RMDs and factor them into your taxes

RMDs must be taken by the end of the year to avoid paying a 25% penalty. The exemption is for your first RMD, which is currently the year you turn 73. If that is the case, you have until April 1 of the following year to take your RMD, but you will also be required to take your RMD by December 31.

This means you will have two RMDs to take in the same calendar year following turning 73, which can create additional income and tax liability for you. In subsequent years, your RMD will need to be taken before the end of each calendar year. Most custodians will automatically calculate your RMD amount each year. If not, you should ask your financial advisor to provide it to you.

Generally, if you inherited a traditional or Roth IRA on or after January 1, 2020, you are likely subject to the 10-year distribution rule unless an exception applies to your unique situation. The type of inherited IRA matters in terms of the taxation on the distributions, potential investment philosophy of the account and RMD requirement.

Inherited Traditional IRA

If no exception applies to you, the inherited traditional IRA account must be liquidated by the end of the 10th year following the original owner’s death including annual RMDs. This is taxed as ordinary income to you and if not properly planned for, may result in a taxable lump sum distribution.

Inherited Roth IRA

The rules for inherited Roth IRAs are slightly different, in which the beneficiary must liquidate the account by year 10 following the original account owner’s death. There are no annual RMDs, and the distribution is non-taxable to the beneficiary.

Rules regarding inherited traditional and Roth IRAs can be complex, so please consult with your financial advisor or a qualified tax professional to ensure that you are meeting the appropriate regulatory requirements.

4. Consider charitable giving

What to know

If you are charitably inclined, there are a variety of ways to support your favorite organizations prior to year-end.

  • Cash donations. For cash contributions, you can deduct up to 60% of your annual adjusted gross income (AGI) for gifts made to a qualifying charity prior to December 31.
  • Non-cash donations. For non-cash donations (e.g., appreciated stock gifts and donations to qualifying private foundations or organizations), charitable deductions are usually limited to 30% of your AGI.
  • Donor advised fund. One vehicle to maximize your charitable impact and amplify your charitable giving is through a donor advised fund (DAF)‡. A DAF is a giving account established at a public charity. The 501(c)(3) public charity serves as a “sponsoring organization,” which manages and administers individual DAF accounts.
  • Direct donation. Another option is to donate highly appreciated, long-term assets directly to your favorite charitable organizations by listing them as the majority beneficiary.
  • Qualified charitable distributions (QCDs): If you are age 70½ or older, you may be able to exclude up to $108,000 per person ($216,000 for a married couple) from your AGI by donating to a qualified charity directly from your IRA. A QCD can satisfy all or part of your current annual RMD and neither you nor the charity will owe taxes on that amount. You must make your charitable gift or QCD by Dec. 31 of the same tax year.

Actions to take

If you use a DAF or transfer highly appreciated assets directly to a qualifying charity, you can potentially take a deduction for the full fair market value of those assets and not have to include the capital gains in your taxable income for that tax year. These assets must be held by you for at least one year and one day to receive favorable long-term capital gains rates.

Remember, charitable giving is only deductible for tax purposes if you itemize your return. If you do itemize, consider accelerating your charitable contributions because of new tax law implementations under the One Big Beautiful Bill Act (OBBBA).

5. Consider making annual gifts

You can gift up to $19,000 (per recipient) without using your federal estate and gift tax exemption. If you can gift-split with a spouse, you can gift up to a combined $38,000 per recipient per year.

You may also consider making payments for tuition and medical expenses directly to providers on the beneficiary’s behalf without tapping into your annual exclusion or lifetime exemption amounts. Talk to your financial advisor to determine whether a gifting strategy might be a good fit for your situation.

6. Consider making your 529 education savings plan contributions

What to know

529 plans are a great way to help loved ones with educational expenses while realizing tax benefits for yourself. 529 plan contributions are made with after-tax dollars, but growth and withdrawals are tax-free, providing the withdrawals are used to pay for qualified education expenses. Single filers can contribute up to $19,000 ($38,000 if married, filing jointly) per beneficiary without impacting their federal gift tax liability.

Actions to take

The best way to maximize your 529 contributions in a single year is to “superfund” the account. This strategy allows you to make up to five years’ worth of contributions ($95,000 for 2025) all at once to reduce your taxable estate without it counting against your lifetime gift tax exemption.

You have until December 31if you would like to qualify for a 529 plan tax deduction or credit. However, plans administered in several states (Georgia, Indiana, Kansas, Mississippi, Oklahoma, South Carolina, and Wisconsin) will allow you to contribute until April 15 of the following year. Iowa allows contributions through April 30 of the following year.

Depending on where you live, you may be able to deduct contributions from your state income tax (or receive a state tax credit). Check with your tax professional to determine whether this is an option for you.

Another option, is to make unlimited payments directly to educational institutions for the benefit of your loved ones for qualified expenses without incurring a gift tax or affecting your $19,000 gift tax exclusion. This can be a great way to reduce your taxable estate without impacting your lifetime gift and estate tax exemption.

7. Consider reviewing your investment portfolios

It’s always a good idea to review your asset allocation and consider rebalancing your investment portfolios as needed at the end of each year.

Tax-loss harvesting

The end of the year can be a good time to sell investments currently at a loss to offset the taxes owed on capital gains from other investments. This strategy is known as tax-loss harvesting, and it can be a great way to lower your tax bill. Tax-harvested gains or losses must be recognized by December 31 to count for the current tax year. Recognizing capital losses before year-end might allow you to offset capital gains recognized throughout the year.

Additionally, your ordinary income can be offset by up to $3,000 with any excess capital losses you may have. Any remaining excess losses can be carried into future years to offset future capital gains and/or ordinary income.

Appreciated assets sales

Depending on your situation, you may also consider selling investments that have appreciated to realize gains, especially if you happen to be in a lower tax bracket now than you expect to be in the future. As always, it’s recommended that you work with your financial advisor or tax professional to determine the optimal time to recognize capital gains or losses.

Wash sale rule

Don’t forget to steer clear of the wash sale rule‡. A wash sale disallows an immediate tax deduction when you sell a security at a loss and then purchase that same security or “substantially identical” security within 30 days before or after the sale date. Keep in mind that this rule can apply to all trades in taxable accounts and IRAs for the taxpayer (or couple if filing jointly).

8. Consider depleting your flexible spending account (FSA) or maxing out your health savings account (HSA)

What to know about FSAs

FSAs allow you to make pre-tax contributions to an account that can be used to pay for eligible dependent care services (like childcare) or eligible out-of-pocket health care expenses. Keep in mind that FSA contributions are considered “use it or lose it,” meaning you generally lose any funds not used by year-end and not claimed by your employer plan’s deadline. Current limits allow individuals to carry over up to $660.

Actions to take

If you have access to an FSA, be sure you understand your employer plan’s deadlines for incurring expenses and submitting claims. The maximum employee contribution that can be made to a health-related FSA is $3,300, and for a dependent care FSA the maximum is $5,000 per household. Both spouses can contribute to separate health-related FSAs, but the dependent care FSA limit is per household.

What to know about HSAs

Unlike the FSA, unused balances in your HSAs do carry over from year to year for you and your family. Eligible contributions to your HSA will typically provide an income tax deduction. In addition, earnings in your HSA generally grow tax-free, and distributions may ultimately be tax-free if they are used for qualified medical expenses.

Actions to take

If used appropriately, HSAs offer tremendous benefits from a tax perspective. It may be a good idea to maximize your contributions by year-end if you have the ability and would like to reduce your income tax burden for the year. The current HSA family contribution limit is $8,550. This limit increases to $9,550 if you are age 55 or older and make the catch-up contribution.

9. Consider reviewing your insurance coverage and beneficiary designations

Year-end is a great time to review your insurance coverage and make sure your estate plan is up to date. This is especially true if you have a life event such as marriage, welcoming children/grandchildren, or another major update to your personal situation.

Insurance

Insurance coverage is designed to protect you, your family, and your business (if applicable), so it’s important to take steps to ensure the coverage is right for you.

First, you need to consider which type of insurance is needed for your situation. Whether you are evaluating life, health, disability, long-term care, or property and casualty (home, auto, umbrella, etc.) policies, there are many nuances to consider when evaluating a policy and whether it’s right for you and your family.

After selecting a policy, you will have to review the coverage on that policy and determine, with help from a qualified insurance professional, whether that is still enough protection for you and your family.

Estate planning

If your personal or financial situation has changed, it is important to review and update your estate planning documents, which include your wills, trusts, powers of attorney (financial and health care), and medical directives. Don’t forget to consult your attorney, financial advisor and your health care provider to ensure that you’ve addressed all your needs.

This is also a great time to update beneficiaries (and their contact information) on existing insurance policies and retirement accounts to ensure all proceeds and accounts will end up in the right hands  should something happen to you or spouse.

10. Consider deferring income for another year and accelerating expenses in the current year

If you expect to end up in a higher tax bracket at year-end, you may want to take advantage of strategies to postpone taxable income until the following year or accelerate deductible expenses this year. For example, you might consider deferring your year-end bonus or postponing distributions from your investment or retirement accounts. Keep in mind that anytime you postpone taking income in the current year, it will likely have an impact on future years.

On the other hand, you could accelerate deductible expenses prior to year-end, if applicable. Examples of deductible expenses that you might consider include discretionary medical expenses (if you itemize) or self-employed business expenses such as office supplies. Be sure to speak with your financial advisor or tax professional to ensure that you are making a sound decision.

Year-end is busy for everyone, but making time to evaluate financial goals, progress toward them and opportunities to optimize finances for the year ahead will help your chances of success, now and in retirement. Set time now to discuss any of these 10 planning considerations with your financial advisor to set you on the right path for a new year.

Interested in learning more about Private Wealth Management? With UMB, you have a guiding partner from financial advising and wealth-building strategies, to retirement and legacy preservation plans.

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Disclosures and Important Considerations

Any statements regarding rollovers are for informational purposes only, and should not be construed as investment advice or a recommendation to move money out of your employee benefit plan.

UMB Investment Management and UMB Private Wealth Management are divisions within UMB Bank, n.a. (a subsidiary of UMB Financial Corporation) that manage active portfolios for employee benefit plans, endowments and foundations, fiduciary accounts and individuals.

Note that “we” and “our” used throughout this letter refers to UMB Investment Management and UMB Private Wealth Management’s thoughts and expectations.

This report is provided for informational purposes only and contains no investment advice or recommendations to buy or sell any specific securities. Statements and projections in this report are based on the opinions and judgments of UMB Investment Management and UMB Private Wealth Management and the information available as of the date this report was published and are subject to change at any time without notice. UMB Investment Management and UMB Private Wealth Management obtained information used in this report from third-party sources it believes to be reliable, but this information is not necessarily comprehensive, and UMB Investment Management and UMB Private Wealth Management does not guarantee that it is accurate. All investments involve risk, including the uncertainty of dividends, rates of return and yield and the possible loss of principal. Past performance is no guarantee of future results.

You should not use this report as a substitute for your own judgment, and you should consult with professional advisors before making any tax, legal, financial planning or investment decisions. This report contains no investment recommendations, and you should not interpret the statements in this report as investment, tax, legal, or financial planning advice.

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