As the year winds down, many retirees start checking items off their usual to-do list, which can include things like reviewing their investment income or taking required minimum distributions (RMDs). But year-end planning doesn’t have to stop there. It’s an opportunity to look at the bigger picture and how your income, investments, and taxes work together to support your long-term goals.
Small, strategic adjustments made now can help reduce future taxes, protect your income, and keep your retirement plan aligned with what matters most to you.
Here are five year-end tax tips for retirees to consider discussing with your advisor.
1) Harvesting Gains and Losses in Taxable Accounts
Before the year ends, it’s worth checking how your investments have performed — especially in taxable accounts. Harvesting losses can help offset gains, and the IRS allows up to $3,000 of net losses each year to reduce ordinary income, with any extra carried forward to future years (IRS Topic 409).
If you have unused losses from past years, you can use them to offset this year’s realized gains. Be mindful of the wash-sale rule, which disallows a loss if you buy the same or “substantially identical” security within 30 days before or after selling it (IRS Publication 550).
2) Consider Roth Conversions During Low-Income Years
A Roth conversion moves money from a Traditional IRA into a Roth IRA, creating taxable income now in exchange for tax-free growth and withdrawals later (IRS Publication 590-A).
For retirees, it can offer greater control over future taxes. Because Roth IRAs have no required minimum distributions (RMDs) during your lifetime, your savings can continue to grow on your own timeline (IRS RMD FAQs). Roth assets also offer estate advantages, since heirs can inherit funds income-tax-free (IRS Publication 590-B).
The trade-off is paying taxes now, which can temporarily raise your tax bracket or Medicare premiums. Ultimately, the key question you need to ask yourself is:
“Does paying taxes today put me in a stronger long-term position than paying them later?”
3) Supercharge Charitable Giving with QCDs and DAFs
If you’re age 70½ or older and own a traditional IRA, you can direct up to $108,000 in 2025 from your IRA straight to a qualifying charity. his is called a Qualified Charitable Distribution (QCD), and counts toward your required minimum distribution (RMD) and is excluded from taxable income (Fidelity Charitable).
Meanwhile, Donor-Advised Funds (DAFs) remain useful in their own right, especially when you wish to “bunch” contributions or donate appreciated assets, simplify grantmaking, and manage charitable giving over several years. For these contributions, keep in mind the AGI-based deduction limits for cash versus appreciated assets. (IRS Publication 526).
4) Manage Medicare and Tax Thresholds Holistically
When you retire, your income decisions don’t just impact your portfolio; they can affect your health-care costs too. For 2025, the standard Medicare Part B premium is $185/month, but if your two-year-prior modified adjusted gross income (MAGI) exceeds $106,000 (single) or $212,000 (married filing jointly), you may face the income-related monthly adjustment amount (IRMAA) surcharge (CMS.GOV).
At the same time, it’s important to remember that the Net Investment Income Tax (NIIT) kicks in at MAGI above $200,000 single / $250,000 married. Coordinating retirement withdrawals, gains, and charitable giving can help you stay aware of and manage these tax & premium cliffs (IRS NIIT).
5) Optimize Asset Location and Withdrawal Sequencing
Where you hold your investments and how you draw them down can materially affect lifetime taxes and portfolio longevity. Studies by Vanguard show that implementing an asset-location strategy (placing less tax-efficient assets in tax-advantaged accounts, and more tax-efficient ones in taxable accounts) can boost after-tax returns by about 0.05% to 0.30% per year (Vanguard).
At the same time, sequencing withdrawals thoughtfully can help you manage your taxes. This can be accomplished by evaluating which accounts (taxable, tax-deferred, or Roth) to draw from first, based on your current income, tax brackets, and long-term goals (Fidelity).
Year-end tax planning is an opportunity to strengthen your retirement strategy before the calendar resets. Adjustments now can reduce future taxes, protect your income, and extend the life of your portfolio.
At FourThought Private Wealth, we help retirees align investments, taxes, and goals for lasting impact. Schedule a conversation with us to ensure your retirement plan continues working as hard as you did to build it.
Disclosure
This material is intended for informational and educational purposes only and should not be construed as specific investment, tax, or legal advice. The strategies and concepts discussed may not be appropriate for all investors and should be evaluated based on an individual’s personal financial situation, objectives, and risk tolerance. Federal and state tax laws are subject to change and may impact the effectiveness of the strategies discussed. Please consult your tax advisor, attorney, or financial professional before implementing any strategy or making any financial decision.
Third-party data and research (e.g., IRS, CMS, Vanguard, Fidelity Charitable) are from sources believed to be reliable but are not guaranteed for accuracy or completeness. This communication is not a solicitation or offer to buy or sell any security or investment product.
FourThought Private Wealth is an investment advisory firm registered with the U.S. Securities and Exchange Commission (“SEC”). Registration does not imply a certain level of skill or training. FourThought Private Wealth is owned by FourThought Financial Partners, LLC, also an SEC-registered investment adviser.