7 Year End Tax Moves For Pre-Retirees in 2025, #281

As 2025 comes to a close, we’re here to help you make the most of year-end tax planning. I’m explaining seven actionable strategies to help you minimize your tax liability and optimize your retirement savings before the New Year. 

From maximizing retirement plan contributions and exploring Roth conversion opportunities to using donor-advised funds for charitable giving and getting the most from your health savings accounts, this episode is packed with practical advice. The insights I’m sharing in this episode will guide you through the essential moves you need to consider before December 31st. 

You will want to hear this episode if you are interested in...

• [00:00] Year-end retirement contribution tips.
• [04:07] Mega Backdoor Roth IRA strategy.
• [08:51] Maximizing charitable tax benefits.
• [12:19] Year-end tax savings key insights.
• [16:24] Maximize HSA contributions strategically.

7 Essential Year-End Tax Planning Strategies for 2025

When the end of the year approaches, savvy savers and future retirees know it’s prime time to make smart financial moves. Here are my top seven actionable steps you can take before December 31st, and even a few after, to set yourself up for retirement success and optimize your tax situation. 

1. Max Out Your Retirement Contributions

For 2025, the maximum contribution is $23,500 if you’re under 50 and $31,000 if you’re over 50 (including a $7,500 catch-up). Contributing up to these limits reduces your taxable income for the year and boosts your nest egg for retirement, especially important if you’re at your career’s earnings peak.

But don’t wait! Corporate payroll deadlines mean these contributions typically need to be made by year’s end. Self-employed individuals might have a little longer, but now is the best time to act. Setting yourself up for the new, higher 2026 limits can also help you keep your savings momentum going.

2. Utilize the Mega Backdoor Roth IRA

High earners who make too much for direct Roth IRA contributions aren’t out of options. The “Mega Backdoor Roth” strategy lets you contribute after-tax dollars beyond the standard 401(k) limits, then convert those funds into a Roth IRA or a Roth 401(k). For 2025, total contribution limits (including after-tax) can be as high as $77,500 if you’re over 50.

This powerful move can supercharge your retirement savings with the potential for decades of tax-free growth. However, not all employer plans allow in-plan conversions, so check with your HR department to explore your options.

3. Consider Roth Conversions

A Roth conversion involves moving pre-tax money from a traditional IRA or 401(k) into a Roth account. You’ll owe taxes on the conversion, but if you’re in a low tax bracket this year, or expect to be in a higher one later, converting now could pay off substantially in future tax savings. Even small conversions ($10,000 - $20,000) can be beneficial if kept in lower tax brackets. 

4. Maximize Charitable Contributions Using Donor-Advised Funds

Charitable giving is generous, but it’s also an opportunity to optimize taxes. Since the standard deduction now exceeds what many typically give, “bunching” several years’ worth of donations into a single year using a donor-advised fund can allow you to itemize and increase your deduction. For example, funding three years of donations at once could push your deductions over the standard threshold, providing a greater tax benefit.

5. Review Stock Options for Tax Efficiency

If you have stock options, especially non-qualified stock options or incentive stock options (ISOs), year-end is an ideal time to review their tax impact. Exercising during a low-income year can mean paying less tax on gains. ISOs, when held beyond the required periods, can qualify for long-term capital gains tax rates. Each type of stock option has distinct rules and opportunities for savings, so analyze your position before acting.

6. Use Flexible Spending Accounts (FSAs) Before They Expire

FSAs allow you to pay for medical expenses with pre-tax dollars, saving you the equivalent of your combined federal and state tax rates (often ~30%). For 2025, you can contribute up to $3,300. Remember: FSAs are “use it or lose it,” so spend down your balance, or you risk forfeiting unspent dollars, with only a limited carryover allowed. Also consider dependent care FSAs if you have eligible expenses.

7. Maximize Your Health Savings Account (HSA)

HSAs are financial powerhouses, offering triple tax benefits: contributions are deductible, growth is tax-free, and withdrawals for qualified medical expenses are untaxed. The 2025 limits are $4,300 for singles and $8,550 for families, plus an extra $1,000 catch-up if you’re over 55. Make sure employer contributions are factored into your personal limit, and if both spouses are eligible, consider separate accounts for maximum catch-up savings.

Year-end tax planning is your chance to make meaningful progress toward retirement readiness and tax efficiency. Whether you’re maximizing workplace plans, exploring Roth opportunities, leveraging charitable strategies, or optimizing account contributions, each move can compound into significant long-term benefits. 

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE 
• Charles Schwab
• Fidelity
• Vanguard

Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

 

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