For most retirees, the tax bill is shaped well before April. Much of it is settled by December 31, through choices about which account to draw from, how much to convert, and where to give.
And the math has changed. Recent tax law added a deduction for taxpayers 65 and older and, starting this year, changed how charitable gifts are deducted. Those rules change how your RMDs, Roth conversions, and giving affect one another.
Effective year-end tax planning for retirees starts with seeing how your income sources interact. Here are four moves to review before December 31. If your paperwork needs sorting first, our guide to organizing your financial records before tax season is a good place to start.
1. Review Your Required Minimum Distributions
If you are age 73 or older, you generally must take required minimum distributions (RMDs) from applicable tax-deferred retirement accounts each year. Missing a deadline can result in a significant tax penalty, although certain corrections may qualify for relief.
Review whether you have withdrawn the required amount from your accounts before year-end. If you reached age 73 in 2026, you generally have until April 1, 2027, to take your first RMD. Keep in mind that delaying your first distribution means taking two RMDs in 2027, which could increase your taxable income.
RMDs are generally taxed as ordinary income, so coordinating withdrawals with Social Security benefits and other income sources is important. A proactive withdrawal strategy can help you anticipate your tax obligations rather than react to them.
2. Evaluate Roth Conversion Timing
A Roth conversion moves eligible assets from a traditional IRA into a Roth IRA. You generally pay income tax on the converted pre-tax amount in the year of conversion, but qualified Roth withdrawals can be tax-free. To count for 2026, a conversion must be completed by December 31.
For some retirees, converting a portion of traditional IRA assets during a lower-income year may help manage taxes over time. For example, the period between retirement and the start of RMDs can present an opportunity to evaluate conversions before required withdrawals increase taxable income.
However, a conversion is not automatically beneficial. It could push you into a higher tax bracket, increase the taxable portion of your Social Security benefits, or raise Medicare income-related monthly adjustment amounts (IRMAA). Medicare uses income from two years prior, so 2026 income affects 2028 premiums. A conversion could also reduce the new senior deduction, which allows taxpayers age 65 and older to deduct up to $6,000 ($12,000 for married couples who both qualify) for tax years 2025 through 2028. The deduction phases out as modified adjusted gross income rises above $75,000 for single filers or $150,000 for joint filers.
Review your projected annual income, available cash for paying conversion taxes, and long-term retirement goals before deciding whether a conversion makes sense. Roth timing should be part of a broader tax strategy, not an isolated year-end decision.
3. Consider Tax-Loss Harvesting and Capital Gains
If you hold investments in a taxable brokerage account, year-end is a useful time to review realized gains and losses.
Tax-loss harvesting involves selling investments at a loss to offset capital gains. If eligible capital losses exceed your gains, you can generally deduct up to $3,000 of net capital losses against ordinary income annually ($1,500 if married filing separately), with unused losses carried forward subject to applicable rules.
Before selling, consider how each transaction fits your investment plan. Selling an asset solely for tax purposes could disrupt your portfolio allocation or cause you to miss future market gains. The wash-sale rule can also disallow a loss if you purchase substantially identical securities within 30 days before or after the sale.
A thoughtful capital gains strategy considers your investment goals, holding periods, income, and potential tax consequences together.
4. Make Charitable Giving More Tax-Efficient
If giving is part of your retirement plan, the rules for deducting it changed in 2026.
If you take the standard deduction, you can now deduct up to $1,000 in cash gifts to qualifying charities, or $2,000 if you’re married filing jointly. Gifts to donor-advised funds and private foundations don’t count.
If you itemize, only contributions above 0.5% of your adjusted gross income (AGI) are deductible. With an AGI of $300,000, for example, the first $1,500 of giving generally won’t be deductible. Other limits may also apply.
Itemizers can also donate appreciated investments held more than one year, generally deducting their fair market value, subject to applicable limits, while avoiding capital gains tax on the growth.
If you’re 70½ or older, a qualified charitable distribution (QCD) lets you send up to $111,000 in 2026 directly from your IRA to a qualifying charity. It can count toward your RMD and stays out of your taxable income when IRS requirements are met, though it can’t also be claimed as a deduction. Keeping the gift out of your income matters more this year. A QCD isn’t subject to the new 0.5% floor, and the lower income can help protect the senior deduction and keep you below Medicare premium thresholds. Confirm eligibility and processing deadlines before arranging a transfer.
For more ideas, explore our guide to charitable planning strategies for intentional giving.
Make Year-End Planning Part of Your Retirement Strategy
The most effective tax decisions are those that support your broader financial goals, not simply those that reduce this year’s tax bill. A strategy that works well today may have different implications for future RMDs, Medicare premiums, or the amount you leave to loved ones.
At Legacy Wealth Management, we help retirees coordinate income, investments, and tax planning around their individual needs and priorities. Reviewing your options before December 31 can help you make informed decisions about the retirement you’ve worked hard to build.
Ready to review your year-end strategy? Connect with Legacy Wealth Management to discuss how tax planning may fit into your retirement plan.
