Key Takeaways
- Several of the highest-value tax strategies have a hard December 31 deadline.
- Roth conversions must be completed by December 31 of the tax year, not by the April filing deadline.
- Required minimum distributions (RMDs) carry a steep penalty for missing the deadline, and the deadline is earlier than many people expect.
- Qualified charitable distributions (QCDs) can satisfy an RMD while also helping reduce taxable income, but only if processed correctly before year-end.
- Tax-loss harvesting only applies to trades settled within the calendar year, so a late-December scramble can be too late.
A client called us in early January a few years back, certain she'd made a smart move: she'd decided in December to convert part of her traditional IRA to a Roth, and figured she had until she filed her taxes in April to make it official.
She didn't. By the time she called, the window had closed, and the strategy she'd been planning around for the better part of a year was no longer available to her. At least not for that tax year.
That mix-up is common, and it comes from a reasonable place. Many tax deadlines run on the April filing calendar. But a handful of moves that can make the biggest difference in retirement run on the calendar year itself, which means December 31 isn't a soft target. It's the door closing.
Below are four of those moves, their deadlines, and why acting on them before year-end matters.
Move 1: Roth Conversions
What it is: Moving money from a traditional IRA (individual retirement account) into a Roth IRA. The short version: your traditional IRA is taxed later, when you withdraw it, and a Roth IRA is taxed now, when you convert it. Once the money is in the Roth, it can grow and later be withdrawn tax-free.
The deadline: December 31 of the current tax year. A Roth conversion must be completed by then, not by tax filing day the following spring. This is one of the more common points of confusion, because IRA contributions can be made up until the tax filing deadline, but conversions cannot.
Why it matters: A Roth conversion is taxed as income in the year it happens. Converting in a year when your income is temporarily lower can mean paying tax on that conversion at a lower bracket than you might face later. Waiting until after year-end doesn't just risk missing the window. It can mean losing the specific bracket opportunity that made the conversion worth considering in the first place.
Who should consider it: Anyone with a gap between retiring and when Social Security or RMDs begin, since that gap often means a lower-income year. This can be especially relevant for higher education professionals, whose pension and retirement timing can create an opportune window of lower taxable income.
Move 2: Required Minimum Distributions (RMDs)
What it is: Once you reach a certain age, the IRS requires you to withdraw a minimum amount from certain retirement accounts each year, whether you need the money or not. That withdrawal is called a required minimum distribution.
The deadline: December 31 for many retirees, with one exception. The year you take your very first RMD, you're allowed to delay it until April 1 of the following year, though doing so can mean taking two RMDs in one calendar year and pushing your income into a higher bracket.
Why it matters: Missing an RMD deadline can trigger a penalty from the IRS, currently a 25% excise tax on the amount that should have been withdrawn, reduced to 10% if corrected within two years. This is one area where "I'll get to it in January" could turn out to be a costly sentence.
Who should consider it: Anyone approaching or already past RMD age with a traditional IRA or similar retirement account. This is also worth close attention for higher education professionals coordinating a pension with other retirement accounts, since the RMD timing must work alongside pension income.
Move 3: Qualified Charitable Distributions (QCDs)
What it is: A direct transfer of money from your IRA straight to a qualifying charity. If you're 70½ or older, that amount can count toward satisfying your RMD for the year while helping keep it out of your taxable income.
The deadline: December 31, but processing time is a factor (and varies).
Why it matters: The transfer must go directly from the IRA custodian to the charity, which means custodian processing times, and sometimes a mailed check, are part of the timeline. Waiting until the last week of December can mean the distribution doesn't complete until January, at which point it no longer counts for the year you needed it to. For clients who give to charity and are also subject to RMDs, this can be one of the more tax-efficient ways to meet both goals at once.
Who should consider it: Anyone who gives to charity regularly and is subject to RMDs. It can also be worth a closer look for clients without children who are already thinking through where their assets will go, since a QCD can be one more tool for directing money with intention rather than letting a RMD go to taxes first.
Move 4: Tax-Loss Harvesting
What it is: Selling an investment at a loss on purpose in order to offset gains elsewhere in your portfolio, which can help reduce your overall tax bill for the year.
The deadline: Trade settlement by December 31, not just the trade order. The detail that catches people off guard is that the trade must settle, not just be placed, by year-end. Depending on the security, settlement can take a day or two after the trade itself, so a sale placed on December 31 may not count for that tax year at all.
Why it matters: This strategy also comes with a specific rule: the wash-sale rule prohibits buying back a "substantially identical" investment within 30 days before or after the sale, or the loss can be disallowed. Getting the timing and the replacement investment right is where this strategy tends to get more complicated than it looks on paper.
Who should consider it: Anyone with a taxable brokerage account holding investments currently worth less than what was paid for them.
What Happens If You Wait
None of these moves are complicated in concept, but they can get tricky with the timing. Each has a mechanism, a processing window, a bracket, a settlement date, that isn't available once January arrives. A strategy that would have worked beautifully in December can become invalid, less effective, or in the case of a missed RMD, penalized, once the calendar turns.
Ready to See Which of These Apply to You?
Not every move here applies to every situation, and that's why your individual situation deserves a focused conversation rather than a guess. Book a complimentary strategy call and we'll look at your big picture together and see what year-end moves could make the most sense for you.
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Sailwinds Financial Strategies is based in Central New Jersey and works with clients across New Jersey, the Tri-State area, and virtually nationwide.
Frequently Asked Questions About What Tax Moves to Make Before 2026 Ends
Is the Roth conversion deadline the same as the tax filing deadline?
No, and this is one of the more common mix-ups we see. IRA contributions can be made up until the tax filing deadline the following spring, but Roth conversions have to be completed by December 31 of the year you want the conversion to count for.
When is my first RMD due?
In the majority of years, RMDs are due by December 31. The exception is your very first RMD, which can be delayed until April 1 of the following year. Delaying can mean taking two RMDs in the same calendar year.
Can a QCD really count toward my RMD?
Yes, a qualified charitable distribution can satisfy some or all of your RMD for the year, provided the transfer is completed correctly and on time. Because the transfer goes directly from your IRA custodian to the charity, starting before December can allow for more processing time.
Does tax-loss harvesting reduce what I owe?
It can help offset capital gains and, within limits, ordinary income, which may help reduce your overall tax liability for the year. The specifics depend on your full portfolio and tax picture, and the wash-sale rule adds a layer of complexity to review with your advisor before making trades.
About the Author
Bernadette "Bernie" Strout, CFP®, is the Founder and Lead Advisor of Sailwinds Financial Strategies, where she specializes in tax strategy and holistic retirement planning for retirees, LGBTQ+ individuals, and higher education professionals. She has more than 21 years of experience in financial services. Prior to entering the field, Bernie worked in technology as a systems designer and holds two patents in pattern recognition and self-teaching systems.