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Top 7 Considerations for Year-End Planning

Holiday lights, cozy evenings by the fire and… tax planning!


Ah, the end of the year is here. Before you unplug for a holiday break, consider these top 7 financial planning considerations for year-end:


1. If you expect your income to increase in the future: Consider making Roth IRA or Roth 401(k) contributions and/or Roth conversions. If offered by your employer plan, consider making after-tax 401(k) contributions. If you are age 59.5 or over, consider accelerating traditional IRA withdrawals to fill up lower tax brackets.

2. If you expect your income to decrease in the future: Analyze strategies to minimize your tax liability now, such as traditional IRA and 401(k) contributions instead of contributions to Roth accounts. Remember that spousal IRA contributions can be made for the benefit of non-working spouses.

3. If you’re over age 72 or if you’ve inherited an IRA account: Ensure you’ve satisfied any required minimum distributions (RMDs). RMDs from multiple IRAs can generally be aggregated. However, each RMD from any inherited IRA must be taken separately before the end of the calendar year. RMDs from employer-sponsored retirement accounts, such as a 401(k) or 403(b), are only required once you are no longer working for the employer unless you are a 5% or more owner of the company. RMDs from employer retirement plans generally must be calculated and taken separately, with no aggregation allowed. However, 403(b) plans are an exception, and RMDs from multiple 403(b)s can be aggregated.

4. If you are planning to make year-end charitable contributions: For taxpayers who claim the standard deduction, you are allowed a deduction of $300 ($600 if MFJ) for cash contributions to certain qualifying charities in 2021. Explore tax-efficient funding strategies, such as gifting appreciated securities or making a Qualified Charitable Distribution (QCD). If you expect to take the standard deduction ($12,550 if single, $25,100 if MFJ), consider bunching your charitable contributions (or contributing to a donor-advised fund) every few years which may allow itemization in specific years.

5. If you own a business: Work with your tax advisor and financial advisor to determine whether you qualify for a QBI Deduction. Consider the use of a Roth vs. traditional retirement plan and its potential impact on taxable income and Qualified Business Income. If you have significant upcoming business expenses, consider if it makes sense to defer or accelerate the costs to reduce overall tax liability. Now is also a good time to get your year-end account in order, if it is not already.

6. If saving for college is a priority: You can use your annual exclusion amount to contribute up to $15,000 per year to a beneficiary's 529 account, gift-tax-free. Alternatively, you can make a lump-sum contribution of up to $75,000 to a beneficiary's 529 account and elect to treat it as if it were made evenly over a 5-year period, gift tax-free. Consider upcoming changes to the FAFSA in determining whether to consider grandparent-owned 529s as part of your college savings strategy.

7. If estate planning is a priority: If there have been any changes to your family, heirs, or if you’ve bought/sold any assets this year, consider reviewing your estate plan. For any year-end gifts, remember that gifts up to the annual exclusion amount of $15,000 per year are gift-tax-free.


A fiduciary financial advisor can help ensure that these items are considered and planned for throughout the year, and be a resource for you at year-end. Of course, if you’d like to discuss further, please feel free to reach out!