7 Quick Tips for Year-End Planning: Key Deadlines to Know
Year-end planning comes down to deadlines. Review RMDs, Roth conversions, Trump account contributions, new deductions and tax-loss harvesting with clients before custodian cutoffs hit.
Key takeaways
RMDs are generally due by 12/31, starting at age 73 or 75 depending on the client's birth year.
Trump account contributions for the year must be made by 12/31.
New deductions phase out at different AGI levels, so watch clients' income closely and re-evaluate planned Roth conversions before year-end.
IRA withholding late in the year can help clients avoid an estimated tax penalty.
Many 12/31 deadlines come sooner, so check each institution's cutoff early.
As the year winds down, many of the most valuable planning moves for clients come with a firm deadline. Required minimum distributions, Roth conversions, Trump account contributions and tax-loss harvesting generally must be completed by 12/31, and new deductions under the One Big Beautiful Bill Act add income thresholds to watch. These seven tips can help you prioritize client conversations now, while there's still time to act and before financial institutions' processing cutoffs, which often fall well before year-end.
Required minimum distributions are generally due by 12/31
For most clients who must take required minimum distributions (RMDs), the deadline is generally 12/31. When RMDs start depends on the client's birth year:
| Year of birth | RMD age |
|---|---|
| 1951-1959 | 73 |
| 1960 or later | 75 |
Designated Roth accounts in 401(k), 403(b) and governmental 457(b) plans don't have lifetime RMDs. Clients who hold only those accounts don't need to take a distribution while they're living.
How the 10-year rule applies to beneficiaries
Many beneficiaries who inherit an IRA must empty the account by the end of the 10th year after the owner's death. Whether they also need annual distributions in the meantime depends on the type of IRA and when the owner died.
If the beneficiary inherited a Roth IRA, or a traditional IRA whose owner died before their required beginning date (RBD), they don't need annual distributions. They just need to empty the entire account by the end of the 10-year period.
If the traditional IRA owner died on or after their RBD, the beneficiary must take annual distributions each year and still empty the account by the end of the 10-year period.
Why consider a Roth conversion before year-end?
Roth conversions continue to be of interest for a variety of reasons.
Tax leverage – will taxes be higher when distributions are taken than when contributed?
Tax-efficient withdrawal strategies – how can clients manage income tax brackets in retirement if they do not have tax-free investments, such as Roth IRAs or life insurance?
Tax-free legacy opportunities – should clients pay taxes now instead of leaving their children to pay higher taxes on higher amounts, potentially during peak earning years?
In addition, clients could pay less taxes or convert more assets when markets are down.
Fund Trump accounts before the 12/31 deadline
A Trump account can be opened any time between the birth of the beneficiary and the beginning of the year they turn 18. But there can only be one Trump account, and it generally must be opened by a legal guardian or parent. A Trump account ceases to exist once the beneficiary reaches the age of 18 and automatically becomes a traditional IRA.
Annual contributions to a Trump account cannot exceed $5,000 (indexed for inflation after 2027). Included in the limit is the $1,000 seed money from the federal government for children born during 2025 through 2028 and up to $2,500 from the employer of the beneficiary or parent. There may be additional qualified contributions from the government or charitable organizations.
Individual contributions are not deductible but may qualify for the annual gift tax exclusion. The custodian must track the basis in the account. Employer, government, or charitable contributions are excludable from income. Contributions must be invested in U.S. equity index funds, and the annual expense must be less than 0.1%. And, of course, no withdrawals are allowed.
How do the new tax deductions affect year-end planning?
The One Big Beautiful Bill Act (OB3) includes new and/or revised deductions. There are different deductions with different income limits for different filers with different effective dates and different ending dates.
| Deduction | Maximum amount | Phase-out |
|---|---|---|
| Senior | $6,000 | S: >$75,000 MFJ: > $150,000 |
| SALT | $40,400 | S, MFJ: > $505,000 MFS: > $300,000 |
| Qualified tips | $25,000 | S: >$150,000 MFJ: >$300,000 |
| Qualified overtime compensation | $12,500 | S: >$150,000 MFJ: >$300,000 |
| Qualified passenger vehicle loan interest | $10,000 | S: >$100,000 MFJ: >$200,000 |
The different phase-out amounts for different deductions and different filers will require close attention to clients’ AGI. Planned Roth conversions will need to be re-evaluated. A dollar of AGI above the $505,000 SALT deduction phase-out can have a draconian impact on the tax rate of that additional dollar.
Use IRA withholding to help avoid an estimated tax penalty
Taxes generally should be withheld or paid through estimated tax payments on a pay-as-you-go basis. However, withholding from an IRA distribution – even near year-end – counts as having been paid ratably throughout the year. Up to 100% of the IRA distribution may be withheld. To avoid including such distribution in income, the client can then use other non-retirement income to complete a 60-day rollover, as long as no other indirect rollover (where the check is made out to the client) from any IRA has been made in the last 365 days.
Harvesting tax losses can offset gains if done by 12/31
For those investments that might not have panned out, capital losses incurred before year end may offset capital gains from other more successful investments. Clients will want to avoid any “wash sale” – buying the same or substantially identical security 30 days prior to the date of sale or 30 days after. Such a loss would be disallowed.
Why review beneficiary designations every year?
There is no deadline for reviewing beneficiary designations. But, if they have not been reviewed for the current year, they should be. Beneficiary mistakes are common, but they can be corrected if caught before death. If not, assets may not pass the way the client intended, or they may pass that way but only after a long, time-consuming court battle.
Caution: These year-end tax strategies with 12/31 deadlines may not be 12/31 deadlines in practice. Financial institutions have much earlier deadlines to process requests and it is a good practice to verify what those deadlines are. Some may be a day or two earlier while others can be two or three or more weeks.