As the year winds down, investors tend to focus on wrapping up deals and preparing for tax season, but your IRA deserves a year-end check-in too.
A few smart moves before December 31 can help you minimize taxes, stay compliant, and set yourself up for stronger returns next year. Here’s what to review while there’s still time to act.
Confirm Your Required Minimum Distributions (RMDs)
If you’re age 73 or older, or you inherited an IRA, you may be required to take a Required Minimum Distribution (RMD) before year-end.
A few reminders:
- The deadline is December 31, unless this is your first RMD year (in which case you have until April 1 of the following year).
- You can take your RMD from one or multiple accounts, as long as the total meets your required amount.
- The penalty for missing an RMD is steep – 25% of the amount that should have been withdrawn.
If you have multiple accounts or inherited IRAs, it’s worth double-checking your calculations now. Your custodians can help you determine the amount that applies to each account type.
Review Opportunities for Roth Conversions
A Roth conversion allows you to move funds from a Traditional IRA into a Roth IRA – paying taxes on the converted amount now, so you can enjoy tax-free growth later.
The end of the year is a strategic time to evaluate conversions because:
- You have a clearer picture of your taxable income for the year.
- You can coordinate with your tax advisor to control your tax bracket.
- It allows you to start compounding tax-free growth as early as possible.
Keep in mind that Roth conversions must be completed by December 31 to count for the current tax year.
Whether you convert a lump sum or a portion of your IRA, the goal is to balance your current tax liability against your long-term savings potential, and this conversation is best had before the year closes.
Max Out Your IRA Contributions
If you’re still in your contribution years, now’s the time to make sure you’re on track.
For 2025, contribution limits are:
- $7,000 for individuals under age 50
- $8,000 for those age 50 or older
You technically have until April 15, 2026, to make 2024 contributions, but contributing before year-end gives your money more time to grow and helps you start the new year organized. If you’re self-employed, don’t forget to review potential SEP IRA or Solo 401(k) contributions. Deadlines for those plans vary depending on how your business is structured.
Revisit Your Investment Mix
Year-end is the perfect moment to assess the balance of your IRA portfolio. Ask yourself:
- Have your real estate or private investments performed as expected?
- Do you have adequate liquidity for next year’s opportunities?
- Are there assets you’d like to revalue, sell, or rebalance before tax season?
Performing a Fair Market Valuation (FMV) for any alternative assets helps keep your reporting accurate and prepares you for 2025 contribution or distribution planning.
This is also a good time to review your beneficiary designations to ensure they reflect your current wishes.
Coordinate With Your Tax and Investment Team
Many of the most effective year-end moves depend on collaboration. Your CPA, financial planner, and IRA custodian or administrator should be in sync on:
- The timing of any conversions,
- Anticipated distributions or new contributions, and
- How your current investments impact taxable income for the year.
At MidAtlantic IRA, we help clients stay organized through this process, ensuring your account administration and documentation are ready before deadlines arrive.
Don’t Wait Until December 31
Every year, investors rush to make last-minute adjustments. Proactive planning can make a meaningful difference.
Whether you’re reviewing RMDs, planning a Roth conversion, or making final contributions, these steps are easier when handled early.
Disclaimer: MidAtlantic IRA, LLC does not provide investment, tax, or legal advice. Individuals should consult appropriate professionals before making any investment decisions or taking distributions.