5 Year-End Money Moves to Make Before December 31

For most of the year, your financial plan runs quietly in the background. The fourth quarter is different. These are the weeks when a few deliberate decisions can still change how this year turns out, especially where taxes are concerned. Once the calendar flips to January, most of these doors close for good. Here are five moves worth reviewing before December 31.

1. Take a fresh look at Roth conversions. Converting money from a traditional IRA to a Roth IRA means paying tax now so it can grow tax free later. In a year when your income dips, or when you have room left in a lower tax bracket, a conversion can lower the taxes you pay over your lifetime. The catch is that it must be completed by December 31 to count for this year. It is worth modeling carefully with your tax professional, because the right amount depends on your full picture.

2. Review your investments for tax losses. If some holdings in a taxable account are worth less than you paid, selling them can create a loss that offsets gains elsewhere. This is often called tax-loss harvesting. Keep an eye on the wash-sale rule, which disallows the loss if you buy the same investment back too quickly. In lower-income years, the reverse can also make sense, realizing some gains while your rate is low.

3. Be intentional about charitable giving. If giving is part of your year, how you give can matter as much as how much. Donating appreciated stock instead of cash can sidestep capital gains tax. If you are age 70 and a half or older, a qualified charitable distribution lets you give directly from an IRA. And a donor-advised fund lets you group several years of giving into one for a larger deduction now, while you decide on the charities later.

4. Fund what you still can. Check whether you have maxed the accounts that close at year-end. Contributions to a workplace retirement plan generally must be made by December 31, including catch-up amounts if you are 50 or older. Health savings accounts have their own rules. An IRA gives you until April, but the year-end accounts will not wait.

5. Confirm your required distributions are handled. If you are 73 or older, the IRS requires a minimum withdrawal from most retirement accounts each year, and the penalty for missing it is steep. Make sure this year’s distribution is out before December 31. If you are charitably inclined, pairing it with a qualified charitable distribution can be a tidy way to meet the requirement and support a cause you care about.

Year-end planning is most valuable when there is still time to act. A few well-timed decisions now could make a meaningful difference. If you’re not sure which moves make sense for you, join us for our complimentary year-end financial planning workshop on October 29. Bring your questions—we’ll leave plenty of time for discussion and Q&A. See workshop details below.

Jeff Fortune, CFP®, is a Wealth Advisor at RVA Wealth Management, a planning-first wealth management firm serving families in the Richmond area. You can reach the office at (804) 497-2100 or info@rvawm.com.

This article is for educational purposes only and is not investment, tax, or legal advice. RVA Wealth Management provides tax-aware financial planning; it does not prepare or file tax returns or represent clients before taxing authorities, which rest with your tax professional. Consult your own tax and legal advisors regarding your situation. Securities offered by Registered Representatives through Private Client Services. Member FINRA / SIPC. Advisory services offered by Investment Advisory Representatives of RFG Advisory, LLC, a registered investment advisor. Private Client Services and RVA Wealth Management are unaffiliated entities.