As the year winds down, now is the perfect time to review your financial picture and take advantage of strategic tax-saving opportunities. A few proactive steps today can help you maximize deductions, minimize liabilities, and position yourself for a stronger financial future. Here are nine key strategies to consider before the year ends:

1) Maximize 401(k) Contributions

Contributing the maximum to your 401(k) is a powerful way to save for retirement while reducing your taxable income.

• For 2025, individuals can contribute up to $23,500.
• If you’re 50 or older (or turning 50 by December 31), you can make an additional $7,500 catch-up contribution.
• Those between ages 60 and 63 are eligible for a larger $11,250 catch-up contribution.

2) Fund a Traditional IRA

IRA contributions are another effective way to save for retirement while potentially lowering your tax bill.

• The 2025 limits are $7,000 for individuals under 50 and $8,000 for those 50 or older.
• Contributions for 2025 can be made until April 15, 2026.

Certain income restrictions apply, so consult your CWA wealth advisor to confirm your eligibility and best strategy.

3) Consider a Backdoor Roth IRA Conversion

If you earn too much to contribute directly to a Roth IRA, a backdoor Roth may offer a workaround. This involves contributing to a non-deductible traditional IRA and then converting it to a Roth IRA.

This strategy can be beneficial for high earners or a non-working spouse, but note that if you have other pre-tax IRA balances, the conversion could trigger taxable income. Always review your full IRA picture before proceeding.

4) Fund a Health Savings Account (HSA)

For those enrolled in a high-deductible health plan, an HSA is one of the most tax-efficient savings vehicles available.

• For 2025, individuals with single coverage can contribute $4,300, and families can contribute $8,550.
• Individuals age 55 or older can add an additional $1,000 catch-up contribution.
• Like an IRA, 2025 HSA contributions can be made until April 15, 2026.

5) Make a Qualified Charitable Distribution (QCD)

The season of giving is an excellent time to support causes you care about while reducing your taxable income. A QCD allows you to transfer up to $100,000 from your IRA directly to charity, satisfying all or part of your Required Minimum Distribution (RMD) for the year.

While RMDs begin at age 73, QCDs can start as early as age 70½. This strategy can be more tax-efficient than donating cash, as the distribution never appears on your tax return.

6) Use Tax-Loss Harvesting

If you have investments that have declined in value, consider selling them to realize a loss—a strategy known as tax-loss harvesting.

• Losses can offset capital gains and up to $3,000 in ordinary income annually.
• Losses must be realized before December 31 to count for your 2025 taxes.

You can immediately reinvest in a similar (but not “substantially identical”) fund to stay invested in the market.

7) Explore Tax-Gain Harvesting

In some situations, realizing gains now can lead to lower future taxes, especially if you fall within the 0% capital gains bracket (up to $48,350 for singles and $96,700 for couples). The final months of the year are ideal for assessing whether harvesting gains now makes sense for your overall tax plan.

8) Review Roth Conversions

If your income is temporarily lower—perhaps during early retirement or a sabbatical year—a Roth conversion may allow you to move funds from a traditional IRA to a Roth IRA at a lower tax rate. This can be particularly strategic before RMDs or Social Security benefits begin.

9) Take Your Required Minimum Distribution (RMD)

If you’re age 73 or older, be sure to take your RMD from IRAs, 401(k)s, and other qualified accounts by December 31 to avoid steep penalties. Missing an RMD can result in additional taxes on the undistributed amount, so it’s crucial to plan ahead.

Closing the Year Strong

By implementing these strategies before the end of 2025, you could save thousands in taxes and strengthen your long-term financial position. To ensure your approach is optimized, consult with your CWA wealth advisor and coordinate with your tax preparer before making any year-end moves.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third party information and may become outdated or otherwise superseded without notice. Third-party information is deemed reliable, but its accuracy and completeness cannot be guaranteed. Individuals should speak with a qualified tax and financial professional based on their own circumstances to determine if the above scenarios are applicable.