Best Year-End Money Moves

As 2025 comes to a close, taking a few proactive steps can optimize your tax situation, boost savings, and set you up for financial success in the new year. Here are some of the best year-end money moves to consider.

Maximize Tax-Advantaged Accounts 

Boost your long-term savings and potentially lower your taxable income by making the most of retirement and health savings accounts. 

• 401(k) and 403(b) contributions: Aim to max out your contributions for 2025, with a limit of $23,500 for most employees. If you are 50 or older, you may be eligible for an additional catch-up contribution of $7,500. The deadline for these contributions is December 31, 2025.
• IRA contributions: The 2025 limit for Traditional or Roth IRAs is $7,000 ($8,000 if you’re 50 or older). You have until the tax filing deadline (April 15, 2026) to make 2025 IRA contributions.
• Health Savings Account (HSA): Max out your HSA contributions, which for 2025 are $4,300 for self-only coverage and $8,550 for family coverage. HSA funds are triple tax-advantaged and can be used for eligible medical expenses.
• Flexible Spending Account (FSA): Plan to use any remaining FSA funds by December 31, 2025, to avoid losing them, as most plans have “use it or lose it” rules. Schedule appointments or stock up on eligible health supplies to spend down the balance. 

Strategic Tax Planning

Leverage year-end strategies to optimize your 2025 tax situation. 

• Roth IRA conversions: If you anticipate being in a higher tax bracket in the future or have a lower-income year in 2025, consider converting a traditional IRA to a Roth IRA. You’ll pay taxes on the converted amount now, but future withdrawals in retirement will be tax-free.
• Charitable giving: Make year-end donations to qualifying charities to be eligible for a tax deduction. If you are 70½ or older, consider a Qualified Charitable Distribution (QCD) of up to $108,000 directly from your IRA to a charity to satisfy your Required Minimum Distribution (RMD) and exclude the amount from your taxable income.
• Required Minimum Distributions (RMDs): If you are age 73 or older, ensure you take your RMD from retirement accounts by December 31, 2025, to avoid a potential 25% penalty on the amount you failed to withdraw. 
• Tax-loss harvesting: Sell investments that have lost value to offset capital gains from winning investments, which can help lower your overall tax bill.

General Financial Housekeeping

The end of the year is an ideal time to perform a general checkup on your financial health. 

• Review and adjust your budget: Look at your 2025 spending habits to create a realistic budget for 2026. Identify areas where you can cut back, such as unused subscriptions, and adjust your savings goals accordingly.
• Pay down high-interest debt: Use any extra cash, such as a year-end bonus, to pay down high-interest debt, such as credit card balances. This frees up cash flow and improves your overall financial standing.
• Rebalance your portfolio: Ensure your investment mix still aligns with your risk tolerance and long-term goals. Rebalancing helps maintain your desired asset allocation.
• Review insurance and beneficiaries: Check that your insurance coverage (life, health, auto, home) is adequate and that the beneficiaries listed on all your accounts (retirement, life insurance) are up to date, especially after any major life changes.
• Check your credit report: Take advantage of your free annual credit report from each of the three major bureaus (Experian, Equifax, and TransUnion) to check for errors and evaluate your credit health. 

Next Year’s Benefits

The end of the year is a great time to make thoughtful decisions about the employee benefits you want for next year.

• Revisit your plans options: Even if you’ve been happy with your health insurance copays and the overall experience of your current plan, you’ll want to revisit your plan options as prices change. 
• Run the numbers: If you have a partner, and they are eligible for health insurance via their employer, you’ll want to see which policy will give your family more for less.
• Don’t leave anything on the table: Take a comprehensive look at all the benefits offered by your employer. There may be benefits available that you didn’t even know about, like disability insurance or gym memberships.

Gather Documents for Tax Time

The end of the year is a great time to start gathering the essential documents you’ll need for the New Year.

• Organize personal information: Make sure personal information like Social Security numbers or tax ID numbers and birthdates for you and any dependents are handy. If you’ve had a new baby, adopted a child, or got married, collect that information, too.
• Collect income documents: Depending on your employment status, you will want to be on the lookout for W-2’s or 1099’s. You may also receive a 1099-INT for interest income, a 1099-G for unemployment benefits, a 1099-R for retirement, IRA, and annuity income, or 1099-misc for miscellaneous items. Many of these documents will arrive after the first of the year.
• Gather deductible documents: Since the standard deduction has been raised, itemizing your taxes is less common. But if you do itemize, you will want to pull together home ownership records like a 1098 for mortgage interest, property tax, and insurance statements; charitable deductions like receipts for cash or donated items; childcare and education expenses, medical insurance and medical expenses.

If you have questions about your personal finances, reach out to a Town & Country representative by emailing us at info@tcfcu.com, calling 800-649-3495 or book a consultation here.