Check This List Twice Before Year-End

Smart Financial Moves to Make Before December 31 

As the year comes to a close, it’s easy to get caught up in the holiday rush, but year-end is also one of the most important times to take stock of your finances. A thoughtful review now can help ensure your investment, tax, and retirement strategies are aligned as you head into the new year. 

Meeting with your financial adviser and tax professional before December 31 can help you identify opportunities to reduce your tax burden, meet key deadlines, and prepare for 2025 with confidence. 

Mind Your Required Minimum Distributions 

If you’re age 73 or older (or 72 if you reached that age before 2023), the IRS requires you to take required minimum distributions (RMDs) from certain retirement accounts each year. Missing this deadline can lead to costly penalties, up to 25% of the amount not withdrawn. 

Work with your adviser to discuss and make sure your distributions are on track and automated if possible. If this is your first RMD year, you can delay your initial withdrawal until April 1 of the following year. However, doing so may mean taking two RMDs in one tax year, which could push you into a higher bracket. 

For charitably inclined investors, qualified charitable distributions (QCDs) may provide a tax efficient way to support a cause, reduce taxable income, and satisfy required minimum distributions from your IRA. Eligible IRA owners age 70½ or older may transfer up to the annual limit (for example, $105,000 in 2024, subject to future IRS adjustments) directly from an IRA to a qualified charity, excluding the amount from taxable income, and for those who must take RMDs the donation may count toward that year’s RMD. 

It’s also worth reviewing your income for the year. If you’ve had a lower-income year, taking more than the required minimum could help “fill up” lower tax brackets strategically. 

Consider Tax-Loss Harvesting 

Year-end is also an opportunity to review your portfolio for tax-loss harvesting opportunities. This strategy involves selling investments that have declined in value to offset gains elsewhere in your portfolio, potentially lowering your taxable income. 

When evaluating this approach, focus on realizing losses from short-term holdings first, since they’re taxed at higher rates. But don’t let taxes drive your investment decisions—any changes should fit within your long-term strategy. 

Be cautious of the IRS wash sale rule, which prevents claiming a loss if you buy a “substantially identical” investment within 30 days before or after the sale. This rule applies across all your accounts, including IRAs and 401(k)s. A careful, well-coordinated approach with your adviser can help you avoid these pitfalls. 

Manage Income and Deductions Wisely 

If your income is close to the next tax bracket, a few timely adjustments could make a noticeable difference. Consider accelerating certain deductions or deferring income where appropriate. For example, if your employer offers the option to defer a year-end bonus, it may help you stay within your current bracket. 

Charitable giving remains a powerful way to support organizations you care about and, if you itemize, may help reduce your taxable income. Ensure your gifts are made and properly documented by year-end. Separately, under federal law for 2024 you may give up to $18,000 per recipient (or $36,000 per recipient if a married couple “splits” the gift) without tapping into your lifetime gift/estate tax exemption. Gifts to individuals above that amount generally require a gift tax return, although no tax is due unless you exceed your lifetime exemption. 

If you’re still working, review your retirement contributions. Maximizing contributions to a 401(k) or traditional IRA can reduce taxable income today while helping you build long-term wealth for the future. Your adviser can help you determine how these contributions fit within your broader financial picture. 

Revisit Life Changes 

Your financial plan should evolve along with your life. Major changes, such as marriage, divorce, a new child or grandchild, relocation, or retirement, can have meaningful tax and investment implications. 

For example, moving to a new state can change your tax exposure or estate planning strategy, while new family members might require updates to your estate documents or beneficiary designations. Be sure to keep your adviser informed of any significant changes so your plan stays current and aligned with your goals. 

Make the Most of the Year-End Window 

The final weeks of the year are a valuable opportunity to fine-tune your financial plan and set yourself up for success in 2025. Consider this your short checklist: 

• Review and complete any RMDs. 

• Evaluate your portfolio for tax-loss harvesting opportunities. 

• Manage income, deductions, and charitable contributions thoughtfully. 

• Update your plan for any major life changes. 

• Coordinate with your adviser and tax professional to ensure every move aligns with your overall strategy. 

Ready to Take Action? 

At GDS Wealth Management, we believe year-end planning is about more than checking boxes, it’s about positioning you for long-term success. Whether it’s refining your investment strategy, reducing taxes, or updating your plan for recent life changes, our team is here to help review your strategy and prepare for the year ahead with confidence.  

Schedule your year-end review with a GDS Wealth Management adviser today to position your portfolio, taxes, and goals for success in 2025. 

GDS Wealth Management (“GDS”) is a registered investment adviser. Registration does not imply a certain level of skill or training. This material is provided for informational purposes only and should not be construed as personalized investment, tax, or legal advice. Certain financial strategies discussed herein may have tax implications that vary based on your individual circumstances. The information contained herein is believed to be accurate as of the date of publication but is subject to change without notice. Investing involves risk, including the potential loss of principal. Past performance does not guarantee future results. Any examples provided are hypothetical and for illustrative purposes only. They are not intended to predict or project the performance of any specific investment strategy or product. GDS does not provide legal or tax advice. Consult their attorney or tax professional for guidance specific to their situation. For additional information about GDS, please refer to our Form ADV, available upon request or at www.adviserinfo.sec.gov.