Between holiday gatherings and end-of-year work deadlines, it might feel like 2025 is quickly slipping through your fingers. But before we say goodbye to this year and hello to 2026, you might just want to pause and take time to review some important financial factors, including your retirement accounts and portfolio.
To help, we’ve shared the top items below that we think should be on your year-end financial checklist. Need help sorting through them? Reach out to us anytime; we’re always here for you!
If You’re Still Employed
Check in With Your Retirement Accounts
If you’re able, maximizing tax-advantaged contributions to your retirement accounts is a simple and effective way to hit two birds with one stone: lower your taxable income for the year and boost your retirement savings.
As a reminder, here are the contribution limits for the 2025 tax year:1
- 457 plan, 403(b), and TSP: $23,500
- IRA and Roth IRA: $7,000
If you’re 50 or older, you’re eligible to make additional catch-up contributions as well:1
- 457 plan, 403(b), and TSP: $7,500 (or $31,000 total)
- IRA and Roth IRA: $1,000 (or $8,000 total)
And, new for 2025, those who are between the ages of 60 and 63 will be able to make “super” catch-up contributions, increasing their total contribution limit for 401(k)s and 403(b)s to $34,750 ($11,250 above the annual limit).1 This super catch-up contribution is redetermined annually, set as $5,000 or 150% of the normal catch-up contribution limit (whichever is greater).
At Provision Wealth Planning, we spend year-end working with our clients to max out their retirement account contributions according to their unique goals. Remember: contributions to your employer-sponsored retirement plan must be completed before midnight on December 31, 2025. If you have an IRA, however, you may make contributions for the 2025 tax year up until the tax deadline of April 15, 2026.
If you’re not able to contribute up to the annual limit, consider at least increasing contributions to meet your employer’s matching limit. Otherwise, you’ll be leaving free money for retirement on the table.
Does a Roth Conversion Make Sense?
If you have a sizable amount of retirement income set aside in a traditional IRA, a Roth conversion could help lower future RMDs and create tax-free income for retirement. By essentially rolling over a portion of your traditional IRA to a Roth account, you’ll pay the tax liability now, and enjoy tax-free qualified withdrawals later on in retirement.
If you do want to discuss a Roth conversion with your advisor, we recommend doing so as soon as possible. These strategies can take time, meaning it may not be possible to complete a conversion within the last day or two of the year.
Review Your HSA or FSA
If you’re currently on a high-deductible health plan (HDHP), you may be eligible to contribute to a health savings account (HSA). If this is something that’s been sitting on the back burner unused, consider stashing away some extra savings—the triple tax benefits can make it well worth it.
Just like a 403(b), 401(k), or IRA, contributions to your HSA can be deducted from your taxable income for the year. The funds grow tax-deferred within the account, and as long as distributions are used to cover eligible medical expenses, they’re tax-free as well.
Unlike flexible spending accounts (FSAs), HSAs can be rolled over year after year and taken with you when you leave your job. In fact, you can leave the funds untouched in your HSA for decades and unlock an additional benefit in retirement. Once you turn 65, you may withdraw from your HSA to pay for anything (medical or not) without incurring penalties, just keep in mind you’ll owe ordinary income tax on the amount withdrawn if it’s not exempt.
If you do have access to an FSA or dependent care FSA, remember that they generally include a “use it or lose it” rule and must be depleted before the end of the year. Though some plans do allow a short grace period for plan participants. Check with your HR department to determine what purchases are eligible and when the funds expire.
Review Your Asset Allocation and Rebalancing Strategy
As we close out 2025, it's a natural time to step back and evaluate your portfolio's asset allocation. Market movements throughout the year can shift your carefully planned balance between stocks, bonds, and other investments, potentially leaving you with more (or less) risk exposure than you intended.
For our clients, we conduct regular portfolio reviews to ensure your asset allocation stays aligned with your goals and risk tolerance. If you're managing your own investments, consider whether your current allocation still matches your timeline to retirement and comfort level with market volatility. This doesn't mean reacting to every market swing, but rather ensuring your long-term strategy remains on track.
Year-end can also be a strategic time to rebalance, particularly if you're looking to harvest tax losses (more on that below) or if significant life changes have shifted your financial priorities.
Consider Tax-Loss Harvesting
The end of the year is a natural time to review your portfolio's past performance and determine if any changes need to be made. As certain assets grow or shrink throughout the year, you may need to reallocate capital to maintain proper diversification and risk protection.
If your portfolio has experienced a mix of investment losses and gains throughout the year, tax-loss harvesting could help "even out" your tax liability. At Provision Wealth Planning, we evaluate tax-loss harvesting opportunities for our clients as part of our year-end planning process, ensuring any strategy aligns with their broader financial goals.
When you harvest losses, you sell some investments for a loss and use that capital loss to offset the capital gains from other investments sold throughout the year. For example, if you made a profit of $10,000 and sold off poor-performing stocks at a loss of $8,000, you could subtract the losses from the gains, dropping your taxable gains to $2,000 ($10,000 gain minus the $8,000 loss).
If your losses exceed your gains, you may deduct up to $3,000 from other ordinary income as well. Any unused losses can be carried forward to future tax years.
Tax-loss harvesting requires careful navigation of IRS rules. For example, the IRS implements a 30-day wash-sale rule, which bars investors from selling and purchasing the same or identical investments within 30 days and claiming the losses. If you'd like to explore whether tax-loss harvesting makes sense for your situation, we're here to discuss how this strategy might fit into your overall plan.
Take Time To Imagine Your Future Career
While retirement might feel far off, late fall and early winter are natural times to start thinking about your long-term career plans at the University of Maine. If you're considering retirement within the next 12 to 18 months, now is the time to begin laying the groundwork.
Key steps to consider:
- Schedule conversations with your boss or leadership team about your intended timeline and when to submit formal paperwork (typically required 12-18 months in advance, depending on your field)
- Explore phased retirement options if you'd prefer a gradual transition rather than an immediate full retirement
- Review your financial readiness to ensure your retirement savings, pension benefits, and projected expenses align with your goals
Even if you're several years away from retirement, taking time now to envision your ideal transition can help you make more intentional decisions about contributions, career planning, and long-term financial strategy. If you have questions about how your University of Maine benefits factor into your retirement timeline, we're here to help you think through those details. Our blog, Navigating Retirement as a Higher Education Faculty & Staff is a fantastic place to start, as well.
If You’re Already Retired
Don’t Forget About RMDs
If you’re 73 or older by December 31, 2025, you’ll need to take required minimum distributions (RMDs) from your tax-deferred retirement accounts this year—this includes your 401(k) and/or IRA. The specific distribution amount is different for everyone, as it will depend on the balance of your account at the end of 2024 and the IRS’s uniform life expectancy calculation.
Neglecting to take RMDs can result in a 25% tax penalty (on top of the ordinary income tax owed). If you remedy the situation within two years, however, the tax penalty drops to 10%.2
If this is your first year taking RMDs, the IRS does allow an additional grace period. You may take RMDs without penalty by April 1, 2026. For every year after you turn 73, however, your RMDs must be completed by December 31.
Consider Qualified Charitable Distributions (QCDs)
If you don’t need your RMDs to help meet your financial obligations, a better alternative to ignoring them (and facing hefty penalties) may be to donate them directly to charity. Called a Qualified Charitable Distribution (QCD), these direct donations from your retirement account to a qualifying charity can be used to both satisfy your RMDs and support your philanthropic goals for the year.
The benefits are significant: QCDs count toward your RMD but don't increase your taxable income the way a traditional distribution would. This can be especially valuable if you don't need the full amount of your RMD to cover living expenses or if you're concerned about being pushed into a higher tax bracket.
For our clients, we coordinate QCDs as part of your year-end tax strategy, ensuring donations are processed correctly and on time. If you're managing this on your own, remember that QCDs must go directly from your IRA custodian to the charity and must be completed by December 31 to count for the current tax year.
Evaluate Your Medicare and Healthcare Strategy
As we approach year-end, it's worth taking a moment to review your Medicare coverage and any supplemental insurance needs. While Medicare open enrollment has passed for 2026, this is still a good time to evaluate whether your current coverage met your needs this year and consider if changes might make sense for next year's enrollment period.
Healthcare costs can significantly impact retirement income, and the right coverage strategy can provide both financial protection and peace of mind. At Provision Wealth Planning, we're having these conversations with our retired clients now as part of our year-end planning process, reviewing how healthcare expenses fit into their overall retirement income strategy.
Consider whether:
- Your current Medicare Advantage or Medigap plan provided adequate coverage for your needs
- Your prescription drug costs were manageable under your Part D plan
- Any anticipated health changes might warrant different coverage next year
If you have questions about how healthcare costs fit into your broader retirement income strategy or how to plan for potential long-term care needs, these are conversations worth having now rather than waiting until the next enrollment window.
Ready for 2026?
While we’ve touched on several important financial considerations to make before 2025 closes out, there are plenty of to-dos you can add to this list. If you have some additional time between now and January 1, consider checking in with other important pieces of your financial puzzle, your estate plan documents (including beneficiary designations), charitable giving intentions, insurance coverage, and more.
If you’d like to discuss these opportunities to maximize your long-term savings and potentially reduce your tax bill for the year, don’t hesitate to reach out to our team. We’d be glad to get together and review your unique financial needs in more detail.
Sources:
1https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions
2https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
