The Q4 Financial Power Play: Your End-of-Year Checklist
The final quarter is your last chance to maximize tax-advantaged savings, lock in investment strategies, and set a powerful financial foundation for the new year. Here are the three most critical areas to review now:
1. Maximize Your Tax-Advantaged Contributions
This is arguably the most time-sensitive and important action for the fourth quarter. Missing these deadlines means losing the tax-saving opportunity forever.
Max Out Retirement Accounts.
401(k) / 403(b): Contributions must be made by December 31st. Review your pay stubs to ensure you're on track to hit the annual maximum (or at least your company's match) by the final paycheck.
IRAs (Traditional & Roth): You have until the tax filing deadline (mid-April of the following year) to make contributions for the previous year, but it's best to plan for it now.
Use Your Health Savings Account (HSA) and Flexible Spending Account (FSA) Funds.
HSA: If you have an HSA, aim to maximize your contributions, as it's a "triple tax advantage" account (contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free).
FSA: Review your Flexible Spending Account balance. Most FSA funds are "use-it-or-lose-it" by December 31st. Use any remaining money on qualified medical, dental, or vision bills.
2. Year-End Investment & Tax Strategy
The end of the year offers unique opportunities to improve your portfolio's efficiency and lower your tax bill.
Consider Tax-Loss Harvesting.
Review any investments in taxable brokerage accounts that have unrealized losses. By selling these positions before year-end, you can use those losses to offset any capital gains you realized throughout the year, potentially reducing your overall tax liability.
Crucial Rule: Be mindful of the "Wash Sale" rule (selling an investment for a loss and buying a substantially identical one within 30 days) to ensure the loss is valid for tax purposes.
Take Your Required Minimum Distributions (RMDs).
If you are age 73 or older (or inherited certain retirement accounts), you must take your RMD from traditional IRAs and 401(k)s by December 31st. Failure to do so results in a substantial penalty.
Rebalance Your Portfolio.
Market performance over the year may have caused your asset allocation (the mix of stocks, bonds, etc.) to drift from your original target. The end of the year is the perfect time to sell some overperforming assets and buy some underperforming ones to get back to your desired risk level.
3. Review and Plan for the Future
Q4 is about tying up loose ends and preparing for a financially successful new year.
Finalize Charitable Giving.
All charitable donations must be completed by December 31st to be eligible for a tax deduction in the current year.
Consider a Qualified Charitable Distribution (QCD) from an IRA if you are over age 70 , as it can satisfy your RMD while being excluded from taxable income.
Gifts to individuals fall under the annual gift tax exclusion (currently $19,000 per person in 2024, subject to change for 2025). Gifts must be completed by year-end.
Update Your Financial Paperwork & Estate Plan.
Have you gotten married, divorced, had a child, or changed jobs? Review the beneficiaries on all your financial accounts (IRAs, 401(k)s, life insurance) to ensure they are current.
Take a quick look at your Will, Trust, and Powers of Attorney to confirm they still reflect your wishes.
Looking Ahead for 2026
The end of the year is the best time to review your budget for the year ahead. Anticipate any new expenses (new car, travel, college tuition) and adjust your savings and investment goals accordingly. This proactive planning prevents financial surprises in January. Don’t let poor planning, or ignorance open doors for silly routine expenses like taxes to make you lose any more money than they should. Have any questions about your specific situation? Book a clarity call and I can help.
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