10 Smart Money Moves Before December 31 | Allworth Financial

The end of the year always seems to sneak up. One minute it’s pumpkin season, the next you’re untangling string lights and wondering where the time went. Before December 31 comes and goes, a few deliberate financial moves can help trim your tax bill, strengthen your plan, and give you a head start on the new year.

1) Maximize Your Retirement Savings

Start by reviewing how much you’ve contributed to your workplace retirement plan: your 401(k), 403(b), or 457. If there’s still room to increase your contribution before year-end, and your cash flow allows it, it’s one of the simplest ways to reduce your taxable income while building long-term wealth.

If you’re 50 or older, remember the IRS allows additional “catch-up” contributions to help you accelerate savings in the home stretch toward retirement.

For IRAs, you technically have until tax filing day to make contributions, but doing it now clears a springtime task and gets those dollars invested sooner.

If your income is lower this year than you expect in the future, it may also be a good time to discuss a Roth conversion with your advisor. Converting pre-tax dollars to Roth means paying taxes now for potentially tax-free growth and withdrawals later, an intentional move that can be powerful when timed right.

2) Take Care of RMDs Before the Deadline

If you’re required to take required minimum distributions (RMDs) from IRAs or workplace plans from which you’re separated from service, make sure they’re completed before December 31 to avoid costly penalties.

If you don’t need the income, consider making a qualified charitable distribution (QCD) directly from your IRA to a qualified charity. The amount donated won’t count toward your taxable income, creating a win-win for your generosity and your tax efficiency.

3) Give Strategically, Not Just Generously

Charitable giving can be even more rewarding when it’s done with intention.

• Gift appreciated securities instead of cash. Donating long-held investments directly to charity can help you avoid capital gains tax and still claim a deduction if you itemize.
• Bunch your contributions. With higher standard deductions, many households don’t itemize every year. One approach is to “bunch” several years of giving into one tax year, often through a donor-advised fund (DAF), and take the standard deduction in off years.
• Time your deduction. If you want the tax benefit now but aren’t ready to pick specific charities, you can fund a donor-advised account before December 31 and do grants later.

4) Review Capital Gains and Losses

If you have a taxable investment account, check your realized and unrealized gains and losses before year-end.

• Tax-loss harvesting can help offset gains elsewhere and even reduce a small portion of ordinary income. Just be mindful of the wash-sale rule, which prohibits repurchasing a “substantially identical” investment within 30 days.
• Gain harvesting can also be valuable. If you’re in a lower tax bracket this year, realizing gains intentionally can reset your cost basis at a higher level for the future.

A review with your advisor can make sure taxes aren’t the primary driver of your portfolio decisions but also aren’t ignored.

5) Use Your HSA and FSA Before Time Runs Out

A Health Savings Account (HSA) is one of the most tax-advantaged tools available: contributions are deductible, growth is tax-deferred, and withdrawals for qualified medical expenses are tax-free.

If you have a Flexible Spending Account (FSA), check your plan’s rules and balance. Many FSAs are “use it or lose it” by year-end or offer only a short grace period. Schedule appointments, refill prescriptions, or replace glasses now to avoid losing those funds.

6) Check Your Withholding and Estimated Taxes

If you had variable income this year (bonuses, commissions, stock sales, or business income) make sure you’ve paid enough in taxes to avoid penalties, but not so much that you’re giving the government an interest-free loan.

A quick check-in with your tax professional can confirm whether you’ve met the IRS “safe harbor” and if a final estimated payment before year-end makes sense.

7) Review Your Equity Compensation

If you receive stock-based compensation, year-end is the right time to get organized.

• Incentive Stock Options (ISOs): Run a projection for the Alternative Minimum Tax (AMT) before exercising to avoid surprises.
• Restricted Stock Units (RSUs): Decide whether to sell shares when they vest to diversify and set aside funds for taxes, or hold them as part of your long-term allocation.

If you had a large vest this year, strategies like charitable gifting or tax-loss harvesting can help balance the impact.

8) If You’re a Business Owner, Review Key Opportunities

For those who own a business, a few year-end checks can make a big difference:

• Set up or fund your retirement plan—a Solo 401(k) or SEP-IRA can deliver meaningful deductions, but some plans must be established by year-end or even sooner.
• Time income and expenses wisely. Accelerating deductions or deferring income can help smooth your tax exposure.
• Tidy up your books and ensure payroll and filings are current. Your future self (and your CPA) will be grateful.

9) Revisit Family Gifts and Education Funding

Annual exclusion gifts are a tax-efficient way to transfer wealth to children or grandchildren without affecting your lifetime exemption. If you’re not sure of the current per-recipient limit, your advisor can confirm the number and ensure your strategy stays on track.

529 plan contributions may also qualify for state tax benefits, and you can “front-load” up to five years of gifts at once using a special election. Just coordinate with your overall estate and retirement plan.

10) Tie Up Loose Ends

A little financial housekeeping now can prevent unnecessary headaches later:

• Update beneficiaries on retirement accounts, insurance policies, and HSAs. They override your will.
• Confirm account titling, especially for jointly held assets or those in trust.
• Review insurance coverage to ensure it still matches your current lifestyle and risk exposure.
• Rebalance your portfolio back to target allocations to maintain your desired risk level.

The Bottom Line

Year-end planning isn’t about chasing loopholes or playing defense. It’s about being deliberate. A few smart, timely moves can lower your tax bill, strengthen your plan, and bring more clarity to your financial picture heading into the new year.

If any of these steps raise questions, whether it’s a Roth conversion, RMD strategy, or charitable giving approach, reach out to your Allworth advisor. Taking action now ensures your money is working as efficiently as possible for the goals that matter most to you.

And yes, go ahead and enjoy the holiday cookies. Just don’t let the IRS take the biggest bite.

This information is meant for educational purposes and not as direct tax or legal advice. Rules and regulations can shift anytime, so it’s always best to consult a qualified tax advisor, CPA, or attorney for guidance tailored to your specific situation.