Year-End Financial Planning: Tax Strategies and Contribution Deadlines You Shouldn’t Miss

As the year comes to a close, life will undoubtedly get more hectic. 

From upcoming holidays to pressing work deadlines, year-end financial planning might be one of the last things on your mind.

Still, it’s a crucial time for making financial decisions that can have a significant impact on tax bills and long-term savings. 
This guide will walk you through essential tax-saving strategies and critical contribution deadlines you need to know before December 31st. This will ensure you end the year not adding “plan my finances better” to your New Year’s resolutions.

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Why Retirement Contributions Matter

This likely isn’t the first time you’ve heard about the importance of maximizing your retirement contributions. You may have also heard that not doing so is “leaving free money on the table.”

It’s true. Not contributing enough to get the full employer match in a 401(k) or similar retirement plan is essentially leaving free money on the table. If you’re realizing now that you might be one of those people, it’s important to know you’re not alone. 

In fact, a Vanguard study found that 34% of participants either don't contribute to their retirement plan or don’t contribute to the full match amount.¹

Here’s how this mistake can add up over time: 

Imagine you earn $100,000 and your employer matches 5% of your contributions dollar-for-dollar. 

Contributing only 3% ($3,000) means you’re missing out on $2,000 in free money from your employer. That $2,000 left unclaimed annually at a 6% return could grow to over $11,450 in 30 years. By not maxing out the match, you’re forgoing both the immediate benefit and its long-term growth potential.

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Covering The Basics: Retirement Accounts and Contribution Deadlines

It can be hard to keep track of the different retirement account types and contribution deadlines. To make everything easier, here’s a breakdown to consider.

Overall, a 401(k) or 403(b) is a retirement savings plan that you potentially get through your workplace, depending on whether the organization is for-profit or non-profit. 

It’s where you can put away money for the future, and sometimes your employer will “match” up to a certain amount of money you contribute. 

The cut-off date to put money in these plans this year is December 31st, 2025. 

Another way to save for retirement is to set up an IRA (Individual Retirement Account). This is something that you usually set up yourself, outside of a job. 

There are two main types with varying tax advantages: Traditional IRA and Roth IRA. 

Unlike your 401(k) or 403(b), you don’t have to rush to put money in by December 31st. You do have until April 15, 2026 (“Tax Day”). However, it’s better to plan now than to wait and potentially miss the opportunity come tax time.

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Tax-Savings Before the New Year

What better holiday gift to give yourself than paying less in taxes? 

Here are a few considerations to make before the year’s end. 

Tax-Loss Harvesting within taxable accounts

If you own some stocks or investments, there’s a chance that some went up in value and some went down in value. 

If you sell investments that have made money, you’d pay what’s called a capital gains tax. If you sell an investment at a loss, it’s known as a capital loss. 
Tax harvesting is when you sell the investments that have lost value to cancel out the taxes you’d owe on capital gains. You can deduct up to $3,000 of any capital losses for the tax year, and any losses above $3,000 can be carried over to future years. 

So if you have capital gains from stocks this year, it may be worth exploring if there’s capital losses you can take before December 31st to minimize the taxes you’d pay on those capital gains. Before you initiate your tax harvesting, be sure to understand how to follow the IRS 31-day wash sale rule so the capital loss is deductible.

Charitable Giving

Giving back to charity is not just good for humanity, but it could also be good for your taxes.

There’s a few options to consider before the year ends. 

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Health Savings Account Contributions 

An HSA is a special account for people with a high-deductible health plan that provides three primary tax benefits: 

1. Your taxable income is lowered based on the money you deposit into the HSA 
2. You may be able to invest the money in stocks or funds and the money grows tax-free
3. You can take the money out tax-free for most medical expenses

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Other Key Financial Deadlines & Considerations

If you’ve made it this far, we have a few more year-end financial tasks to check off your checklist. 

Required Minimum Distributions (RMDs) 

Once you’re retired and 73 or older, you have to take a certain amount of money from your retirement accounts. This is known as Retirement Minimum Distributions, or RMDs. 

The deadline for a person’s first RMD is April 1st of the year after turning 73. Who;e standard deadline is December 31st, IRA grants an extension for the first RMD.  From that point on, the RMD deadline is December 31st. Penalties are significant (25% of what you were supposed to withdraw). If you catch your mistake and correct it generally within two years, the penalty can be lowered to 10% of the RMD.

A best practice would be calling your retirement plan provider to confirm the RMD amount and withdraw it before December 31, 2025 to avoid penalties. 

Flexible Spending Account (FSA) Funds

A flexible spending account fund is an account where you can set aside pre-tax money from your payroll to cover medical expenses. It lowers your taxable income, but you usually have to spend the money by a particular deadline or lose it. 

Similar to many of the above plans and deadlines, you will likely need to spend the money in your FSA by December 31, 2025 - you need to use it, or lose it. Some plans give you a grace period (like an extra 2.5 months) or let you roll over up to $640 into the next year (depending on employer rules). 

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Making the Most of 2025

Whether it’s maxing out retirement accounts or meeting RMD deadlines, you should take some time to evaluate key financial areas to take advantage of this year. 

With many of these areas having a deadline of December 31st, 2025, the sooner that you’re able to plan ahead the better. 

In case you’re overwhelmed by everything to consider, it’s possible that a financial advisor with a deep understanding of retirement planning can help you navigate the year-end checklist.