With the end of the year fast approaching, now is a good time to review your financial situation and check in on how you’re tracking toward your goals. Thoughtful year-end planning can help you set yourself up for success in the coming year.
Here are seven strategies to consider as you think about optimizing your finances before the end of 2024.
1. Maximize retirement contributions
One of the most impactful steps you can take is to review and maximize your retirement contributions. For traditional IRAs and Roth IRAs, contributions for 2024 must be made by Tax Day, which is April 15, 2025. For business owners, you can create and fund most employer-sponsored retirement plans through your tax-filing deadline, which includes extensions.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The SECURE Act 2.0 introduced several changes to the contribution rules for IRAs and employer-sponsored retirement plans. You should consult your financial adviser and tax professional to determine how these changes might affect you and work with them to plan for your retirement contributions.
2. Take required minimum distributions (RMDs)
If you're 73 or older, you must take your RMDs from retirement accounts by December 31, 2024, to avoid penalties. You can defer your first RMD until April 1 of the year after you turn 73. Subsequent RMDs, however, must be taken by December 31 each year. So, if you turned 73 in 2024, you could defer your first RMD to as late as April 1, 2025—but then you’d have to take your 2025 RMD by December 31 of 2025, and there can be some downsides to taking two RMDs in one year.
Recent IRS regulations have also clarified RMD requirements for inherited IRAs. Starting in 2025, certain beneficiaries will need to take annual RMDs in addition to withdrawing the entire IRA by the end of the 10th year after the original owner’s death, so it’s important to discuss these complex rules with your adviser and tax professional.
3. Harvest your investment losses
Tax-loss harvesting can be a valuable strategy to offset capital gains taxes: By selling investments at a loss, you can reduce your taxable income. It’s important, however, to be mindful of the wash sale rule, which disallows the deduction if you repurchase the same or a “substantially identical” security within 30 days before or after the sale. Consulting a tax professional can help you navigate the nuances of these rules effectively.
4. Make year-end gifts
The annual use-it-or-lose-it gift tax exclusion for 2024 allows you to give up to $18,000 per recipient ($36,000 for married couples) without incurring gift taxes. If you exceed this amount, you can still make aggregate lifetime gifts up to $13.61 million ($27.22 million for married couples) without triggering gift or estate taxes, as of 2024. Note that under the terms of the Tax Cuts and Jobs Act of 2017, the unified credit for gift and estate tax will revert to pre-2018 levels at the end of 2025, so planning your gifts in advance can be advantageous.
5. Donate to charity
Charitable contributions can be a tax-efficient way to support causes you care about while reducing your taxable income. If you itemize deductions, you may be able to deduct charitable contributions up to a certain percentage of your adjusted gross income. Contributions of appreciated assets and securities can be particularly beneficial for some people, as you can deduct the fair market value and avoid capital gains taxes.
For those over 70½, making a qualified charitable distribution of up to $105,000 from an IRA can potentially be a tax-efficient way to meet RMD requirements while supporting charitable organizations (although note that you aren’t required to begin RMDs until you turn 73 if you were born between 1951 and 1959). These distributions are not income tax deductible, but the amount of your qualified charitable distributions (QCDs) that year is not included in your income.
6. Review your stock options
If your employer offers incentive stock options (ISOs) and you will not be subject to the alternative minimum tax (AMT) in 2024, consider exercising vested in-the-money options, which is when you purchase your company’s stock at a discounted rate, and therefore, are purchasing it at a profit. This can be a potentially tax-efficient move with little or no federal income tax consequences, depending on your specific situation. A tax adviser can help you determine the appropriate course of action.
7. Consult with advisers
Year-end planning can be complex, and the strategies that are right for you will depend on your individual circumstances. Consulting with a financial adviser or tax professional can help you navigate these decisions and set yourself up for success in the coming year.
The bottom line
The end of the year is an excellent time to review your financial situation and make strategic moves to check in with your goals. By considering these seven strategies and consulting with professionals, you can position yourself for financial success in 2025 and beyond.
JPMorgan Chase & Co., its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment advisor, member FINRA and SIPC.
Related Content
- Who Will Be the Beneficiaries of Your Wealth?
- Rattled by RMDs? Look No Further
- Developing a Charitable Giving Strategy: Where to Begin
- Five Changes Coming to IRAs and 401(k)s in 2025
- You Need a Smart Tax Strategy to Get the Most Out of Your Stock Options
-
What Trump’s 'Big Beautiful Bill' Means for Your Utility BillsIf passed, the 'Big Beautiful Bill' could make home energy upgrades more expensive and raise monthly costs. Here's how much more you might pay and how to prepare.
-
What Boomers and Gen Xers Can Learn from Younger ColleaguesWhether you're Gen X or a baby boomer, your younger colleagues' opinions on work may help you find a new job or be happier in the one you've got.
-
Over 50 and Still Paying Student Loans? Here's Some HelpIt's the club no one wants to join. But if you are over 50 and still paying student loans, there are ways to tackle both debt and retirement savings.
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.
-
The Six Pros This Adviser Says You Need to Sell Your BusinessSelling your business isn't as simple as getting the best price and walking away. These are the six professionals you'll need to get a deal across the finish line.
-
AI Is Missing the Wisdom of Older AdultsAI will increasingly affect your healthcare and finances, but young workers are primarily designing the systems and getting most of the jobs.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build WealthConsistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key PiecesIf retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
Baby Boomers vs Gen X: Who Spends More?Baby Boomers and Gen X are guilty of spending a lot of money. Here's a look at where their money goes.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
