Five Retirement-Account Moves to Make Before December 31

Some money choices can wait. These five can't. Each one ends on December 31. After that, the chance is gone for the year. Here is what each one means, in plain English, with an example.

Key Takeaways

• If you are 73 or older, you must take some money out of your IRA by December 31. If you don't, the fine is 25% of what you should have taken out.
• If you are 70½ or older and give to charity, you can give straight from your IRA. That can lower your taxes.
• Money only counts for your 2026 401(k) if it comes out of a 2026 paycheck.
• Moving money to a Roth IRA, and selling investments to cut your taxes, both have to happen by December 31.

1. Take Your Required Minimum Distribution

You never paid tax on the money in a regular IRA or 401(k). So the IRS wants its share later. Once you turn 73, the IRS makes you take some money out every year. Then you pay tax on it.

The amount you must take out is called a required minimum distribution, or RMD. For 2026, the deadline is December 31, 2026.

There is one exception. The year you turn 73, you can wait until April 1 of the next year. But then you have to take two in one year. More income in one year can mean a higher tax rate on part of it. (That's called moving into a higher tax bracket.)

What happens if you miss it: the IRS fines you 25% of the money you didn't take out. If you fix it within two years, the fine drops to 10%. Either way, it's money you lose for nothing.

Example: Linda is 75. Her IRA had $500,000 at the end of last year. The IRS says she must take out about $20,325 this year. (That's $500,000 divided by 24.6, a number from an IRS table.) If she forgets, her fine could be about $5,080. She still owes the tax, too.

Watch for: an IRA you inherited, which can have its own yearly rules. And old 401(k)s from past jobs. Check each account.

2. Give to Charity From Your IRA Instead of Your Checkbook

If you are 70½ or older, you can send money straight from your IRA to a charity. This is called a qualified charitable distribution, or QCD. You can give up to $111,000 this way in 2026.

Here is why it helps. The gift counts toward the money the IRS makes you take out. And you don't pay tax on it.

That matters more this year. Starting in 2026, if you list your gifts on your tax return to lower your taxes (called itemizing), the tax break for gifts gets smaller. Keeping your income lower can also keep your Medicare costs down. And it can help you keep the new $6,000 tax break for people 65 and older. That break shrinks once income goes over $75,000 for one person, or $150,000 for a married couple.

Example: A Cypress couple in their mid-70s gives $8,000 a year to their church. They don't itemize. If they write a check, only $2,000 of it comes off the income they pay tax on. (That's the most a married couple who doesn't itemize can take off in 2026.) If they give from their IRA instead, all $8,000 stays out of the income they pay tax on. It also counts toward the money they have to take out.

3. Make the Most of Your 401(k) Before Your Last Paycheck

A 401(k) is a retirement account at work. Money only counts for 2026 if it comes out of a 2026 paycheck. You can't add more for 2026 after the year ends.

Here is the most you can put in for 2026:

Example: Marcus is 61. He works at a Houston engineering firm. He has put in $18,000 so far this year. He is allowed to put in up to $35,750. If he raises his amount for his last few paychecks, he can save thousands more. Any amount he doesn't use this year is gone for good.

New this year: did you earn more than $150,000 from your job in 2025? Then your extra "catch-up" money now has to go in as Roth. That means you pay the tax now, not later. We explain it in New in 2026: Why Your 401(k) Catch-Up Contributions May Now Have to Be Roth.

Not everything ends on December 31. You can still add to an IRA for 2026 until April 15, 2027. The same goes for a health savings account (HSA). The HSA limit is $4,400 for one person and $8,750 for a family. If you're 55 or older, you can add $1,000 more. To add to an HSA, you need a health plan with a high deductible. And you can't add to it once you're on Medicare.

4. Consider a Partial Roth Conversion

A Roth conversion means moving money from a regular IRA into a Roth IRA. You pay tax on the money you move this year. Later, you can take it out tax-free, as long as you follow the IRS rules. To count for 2026, it has to be done by December 31.

This works best in a year when your income is low. For many people, that's after they stop working but before Social Security and their required withdrawals start. Texans get a bonus here: there is no state income tax on the money you move.

Example: A married couple retired at 62. They live on their savings. After their deductions, their income this year is $40,000. In 2026, a married couple pays 12% on income up to $100,800 (after deductions). So they could move about $60,000 and pay 12% on it. Later, when required withdrawals and Social Security start, their rate could be higher.

Be careful: you can't undo a Roth conversion. It can also raise your Medicare costs two years later. And it can shrink the new tax break for people 65 and older. Talk with your tax preparer before you do it.

5. Review Gains and Losses in Your Taxable Accounts

This one is for money you have invested outside your retirement accounts.

• Use losses to cut your tax: if an investment is worth less than you paid, you can sell it. The loss can cancel out gains you made this year. It can also lower your other income by up to $3,000. Any loss you don't use carries over to next year. One rule: don't buy the same investment back within 30 days. If you do, the loss doesn't count.
• Take gains at 0% tax: a gain is what you make when you sell an investment for more than you paid. If you held it more than a year and your income is low enough, you may pay no tax on the gain. In 2026, that's up to $98,900 of income (after deductions) for a married couple. For one person, it's $49,450. You can sell, then buy back, and pay no tax on the gain.

Your Year-End Checklist

• Take your required withdrawal from every IRA, inherited IRA and old 401(k)
• Give to charity straight from your IRA, if you are 70½ or older
• Raise your 401(k) amount for your last paychecks
• Decide on a Roth conversion with your tax preparer
• Check your investments for gains and losses
• Make sure the people named on each account are still right

Frequently Asked Questions

When do I have to take my 2026 required minimum distribution?

By December 31, 2026. If 2026 is the year you turn 73, you can wait until April 1, 2027. But your next one is still due by December 31, 2027.

Can I still add money to an IRA for 2026 after December 31?

Yes. You can add to an IRA or an HSA for 2026 until April 15, 2027. A 401(k) is different. That money has to come out of a 2026 paycheck.

How much can I put in my 401(k) in 2026?

Up to $24,500. If you are 50 or older, you can add $8,000 more. If you are 60 to 63, you can add $11,250 more instead.

How much can I give to charity from my IRA in 2026?

Up to $111,000 per person, if you are 70½ or older. The money goes straight from your IRA to the charity.

Where to Start

These five moves affect each other. Moving money to a Roth raises your income. Higher income can change the tax rate you pay on gains. Giving from your IRA can change your Medicare costs. That's why it pays to look at them together, before December.

Want a second set of eyes on your plan? A fee-only fiduciary financial planner can help. That's a planner who is paid only by you, not by commissions, and who must put your interests first. They can look at these moves with your whole picture in mind. They can work with your tax preparer, too. Schedule an introductory call while there's still time before December 31.

This material has been prepared for informational purposes and is not intended as tax, legal or investment advice. Please consult a professional for specific information regarding your individual situation. The examples in this article are hypothetical and for illustration only.

Investment advice offered through The Wealth Consulting Group, an SEC Registered Investment Advisor, doing business as Life Strategy Financial.