Your Year-End Financial Planning Checklist
As the calendar turns toward the final weeks of the year, many families and individuals naturally begin focusing on holidays, travel, and time spent with loved ones. But year-end is also one of the most important windows for smart financial decision-making—particularly for taxes, retirement planning, and long-term savings. A few small steps taken before December 31st can meaningfully impact your financial picture in the upcoming year.
To help you stay organized, here is a simple, effective year-end financial checklist covering the most important areas, along with a brief overview of how each item may benefit you.
1. Maximize Your 401(k) or Employer Retirement Plan Contributions
If you’re still working, your employer retirement plan remains one of the most powerful tools for building long-term wealth. Year-end is a great time to check your progress toward the IRS maximum.
For 2025, the employee contribution limit for most 401(k), 403(b), and 457 plans is $23,500.
If you are age 50 or older, you are eligible for a standard catch-up contribution of an additional $7,500.
Under SECURE Act 2.0, individuals ages 60 through 63 may qualify for an enhanced “super catch-up” contribution. For 2025, this special catch-up amount is $11,250, providing additional room for those nearing retirement to accelerate savings.
Increasing your contributions before December 31st not only boosts your retirement savings but also lowers your taxable income for the year when contributing to a traditional (pre-tax) account. Even a small increase near year-end can have a meaningful impact over time.
2. Consider IRA Contributions—Traditional or Roth
If you’re looking to strengthen your retirement strategy further, an Individual Retirement Account (IRA) may offer an additional planning opportunity. You have until Tax Day to make 2025 IRA contributions, but reviewing this now ensures you’re on track.
For 2025, the total contribution limit across all of your traditional and Roth IRAs is $7,000, or $8,000 if you’re age 50 or older.
Traditional IRAs may offer tax-deductible contributions depending on your income and participation in an employer plan. Roth IRAs don’t provide an upfront deduction but allow your investments to grow tax-free and be withdrawn tax-free in retirement if certain requirements are met.
Year-end is the ideal time to evaluate which type best fits your tax picture and long-term goals.
3. Make 529 Plan Contributions for Education Savings (and Possible State Tax Benefits)
For parents or grandparents saving for a child’s education, 529 plans remain one of the most efficient vehicles available.
Many states—including Illinois—offer a state income tax deduction or credit for contributions to an in-state 529 plan. In Illinois, eligible taxpayers receive a deduction on contributions made before year-end, providing both long-term education savings and a potential near-term tax benefit.
A newer planning opportunity under SECURE Act 2.0 allows certain unused 529 funds to be rolled into a Roth IRA for the beneficiary, provided specific requirements are met. While limits and eligibility rules apply, this provision adds meaningful flexibility for families concerned about overfunding education accounts.
Even modest contributions can compound meaningfully over time, and 529 funds can be used for a wide range of qualified education expenses.
4. Use Qualified Charitable Distributions (QCDs) to Satisfy RMDs
For individuals taking their Required Minimum Distribution (RMD), a Qualified Charitable Distribution is one of the most tax-efficient ways to support charities you care about.
A QCD allows you to direct a portion of your IRA distributions straight to a qualified charity. When done correctly, that distribution is excluded from your taxable income and can count toward your RMD.
Because QCDs bypass income entirely, they can be especially beneficial for retirees who give charitably each year or individuals looking to reduce income-based taxation thresholds such as Medicare premium surcharges.
5. Review Your Tax Withholding and Estimated Payments
The end of the year is an excellent time to ensure your tax picture is on track. A quick review of your withholding, investment activity, capital gains, and any large one-time events can help you avoid surprises at tax time.
Many families also use this time to harvest capital losses to offset gains, and organize the documents their tax professional will need early in the new year.
Final Thoughts
Year-end planning does not need to be complicated—but it does need to be intentional. A few proactive steps now can help reduce taxes, strengthen your retirement strategy, and create greater clarity for the year ahead.
Working with a financial planner can help ensure these tools are applied correctly and in coordination with your broader goals. If you’re unsure which strategies make the most sense for your situation, now is the perfect time to have that conversation before the year closes.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
