Year-End Financial Planning: Key Dates and Deadlines

Although it’s only November, the end of the year will arrive before we know it. Between holidays and travel, the last few weeks of the year can fill up quickly. For clients considering planning opportunities before year-end, it’s important to start the process early.

December 31st is a key deadline for many planning disciplines, including portfolio tax planning, tax-deferred account planning and charitable giving. In this article, we’ll review these deadlines and see which areas offer a more flexible timeline. While financial planning is an ongoing process, the start of the new year can provide a natural checkpoint to make any necessary adjustments.

Portfolio Rebalancing: Managing Risk Ahead of 2026  

In recent years, the stock market has delivered strong gains compared to other asset classes. As a result, some investors may now find themselves significantly overweight in equities if they haven’t rebalanced their portfolios recently.

Rebalancing ahead of 2026 can be a good time to take risk off the table and ensure that your portfolio aligns with your financial plan. That’s especially true for clients nearing retirement age, who may be less able to weather future stock market volatility. Given the strong market performance and differing asset class returns, portfolios may drift away from target allocations, which can create a need to shift toward more stable asset classes. 

Portfolio Tax Planning: Timing Gains and Losses

The year-end marks a hard deadline for portfolio tax planning purposes. Realized capital gains count toward income in the year they take place, meaning the difference between liquidating in December and January can be substantial. That’s especially true for individuals whose income may fluctuate significantly each year, such as entrepreneurs and executives. 

Given the market’s performance over the past few years, clients may not have capital losses to realize. Nonetheless, for clients who do have assets trading below their cost basis, harvesting those losses before the end of the year can offset other capital gains or up to $3,000 of ordinary income. By reinvesting the proceeds into assets that are similar (but not identical) to those sold, investors can ensure that their portfolio allocation stays on track. 

It’s also important to be strategic about realizing gains on assets that investors plan to liquidate. For clients who expect to earn more income next year, selling appreciated assets in 2025 may help reduce overall taxes paid. For those who expect to earn less next year, waiting until January can make sense instead. The distinction between short and long-term gains can play a role in this decision as well. 

Investors should also consider the timing of a potential increase to their tax bill. Taxes on asset sales made in December need to be paid in just four months, but waiting until January pushes the due date off until April 2027. Depending on an investor’s liquidity needs, one of these options may be more preferable than the other. 

Tax-Deferred Accounts: Firm and Flexible Deadlines

Some retirement accounts come with a firm year-end deadline. If you contribute to a 401(k) as an employee, for instance, contributions must be made by December 31st to count toward your 2025 total. Employees can contribute up to $23,500 for those under the age of 50 and up to $31,000 for those over 50. That’s especially important for tax planning purposes, since traditional 401(k) contributions can be used to reduce your current year taxable income. 

In contrast, IRAs (both Roth and Traditional) have an extended deadline. Individuals can elect to have contributions count toward 2025 up until April 2026. That allows for greater tax planning flexibility, with the ability to increase your contributions depending on how your financial year ended up. 

The final important year-end deadline for retirement accounts has to do with Roth conversions. If you convert a Traditional IRA into a Roth IRA, you may owe income taxes on a portion of the account value converted. Since that value is taxable in the year in which the conversion takes place, timing this process strategically can help minimize the tax impact. Roth conversions are valuable considerations for individuals who are in a lower tax bracket during the current year, as compared to their projected future tax bracket.

Charity and Philanthropy: Planning Gifts Effectively

The last major area for clients to consider before year-end is philanthropy and gifting. Generally speaking, charitable contributions must be made by December 31st to reduce taxable income in the current year. For those looking to secure an immediate write-off but maintain future charitable flexibility, tools like Donor-Advised Funds can be worth considering. 

For clients obligated to take Required Minimum Distributions (RMDs) from their IRA, it’s especially important to stay aware of the year-end deadline. Qualified Charitable Distributions (QCDs) are a popular way to offset RMDs and the associated increase in taxable income. Like other forms of charitable giving, however, QCDs must be executed by the end of the year and should take place before taking any personal distributions from your IRA. 

Similar rules apply to individuals planning to make gifts, such as parents giving money to their children. Gifts must be made before the end of the year to fall under the annual gift tax exclusion, which is $19,000 for individuals and $38,000 for married couples in 2025. Additionally, any payments made directly to the institution for either medical or education expenses do not count toward that annual gifting limit. Gifting into a tax-deferred account like a 529 plan, IRA, or Roth IRA can also be utilized to strategically pass assets to the next generation.

For 529 plans, the regular gifting limits apply, however, there is a super funding rule that allows for a one-time contribution of five times the annual contribution limit without triggering any gift tax reporting. This means individuals can give up to $95,000 in a single year while married couples can give $190,000 in a single year. 

For IRA and Roth IRA gifts, there are a few key considerations. The gift should be made as cash to the individual who then contributes the cash to the appropriate retirement account. The giftee must also have earned income that is equal to or greater than the gift amount and the contribution limits for IRAs and Roth IRAs still apply. 

Conclusion: Action Prevents Urgency  

As the end of the year approaches, the final stretch of 2025 can offer a valuable time to revisit your financial plan. The key to year-end financial planning is taking action before deadlines become urgent.

By addressing financial planning concerns early, you can start 2026 aligned with your long-term goals. Starting the year-end process now gives your financial team enough time to address any necessary changes. If you have questions about year-end changes or the financial planning process as a whole, please reach out to us anytime.