7 Key Strategies to Consider Prior to Year-End
As we enter the final months of 2026, investment performance is not the only number worth analyzing. The decisions you make between now and December 31 could also affect how much of your investment returns you are able to keep after taxes. While taxes generally shouldn't be the primary driver of investment decisions, a thoughtful year-end review can uncover opportunities to manage capital gains, make the most of retirement accounts, and potentially reduce your overall tax burden.
The key is to start planning early. Here are seven year-end investment and tax strategies worth considering as the calendar turns to fall. As always, if any of these strategies prompt questions, please do not hesitate to contact us.
1. Harvest Losses - or Gains
Start by reviewing the capital gains and losses you've realized so far this year. If you have a net capital gain, you may be able to offset some or all of it through tax-loss harvesting. This involves selling investments that are worth less than what you originally paid for them and using those realized losses to offset realized capital gains.
What if your losses exceed your gains? Individuals generally can use up to $3,000 of net capital losses each year ($1,500 if married filing separately) to offset ordinary income. Losses beyond the annual limit generally can be carried forward to future tax years.
On the other hand, if you already have significant realized losses, you might consider realizing gains on appreciated investments. Those gains could potentially be offset by your losses, depending on your individual circumstances.
Why it matters: Investment losses aren't always bad news from a tax-planning perspective. They may provide an opportunity to reduce the tax impact of gains elsewhere in your portfolio.
2. Be Mindful of the Wash Sale Rule
Tax-loss harvesting comes with an important catch: the wash sale rule.
Generally, if you sell an investment at a loss and purchase the same or a "substantially identical" security within 30 days before or after the sale, the loss may not be deductible at that time. Instead, the disallowed loss generally gets added to the cost basis of the replacement investment.
One option may be to wait more than 30 days before repurchasing the investment. Another may be purchasing a different investment that provides similar market exposure without being considered substantially identical.
Be especially careful when you have multiple investment accounts or automatic purchases occurring elsewhere.
Why it matters: A well-intentioned attempt to harvest a tax loss could lose its immediate tax benefit if the wash sale rules aren't considered.
3. Consider Timing When Selling Appreciated Investments
Thinking about selling an investment that has significantly increased in value? The timing of the sale can matter.
If you expect your taxable income to be lower in 2027—perhaps because of retirement, a career change or lower business income—postponing a sale until next year could potentially result in a different capital-gains tax outcome.The opposite may also be true. If you anticipate substantially higher taxable income next year, realizing a gain in 2026 could be worth considering. Tax consequences shouldn't override sound investment decisions, however. Portfolio diversification, risk, liquidity needs and your long-term financial plan should remain central to the decision.
Why it matters: Sometimes when you realize an investment gain can be almost as important for tax planning as the amount of the gain itself.
4. Consider Donating Appreciated Securities
If charitable giving is already part of your financial plan, consider whether donating long-term appreciated securities instead of cash may make sense.
When certain appreciated securities are donated directly to an eligible charity, you generally don't recognize the capital gain that would have resulted from selling the investment first. If you itemize deductions and meet applicable requirements, you may also qualify for a charitable deduction based on the investment's fair market value, subject to applicable limitations.
What about an investment that's worth less than you paid for it? It may make more sense to sell the investment first, potentially recognize the capital loss, and then donate the cash proceeds.
Why it matters: The way you make a charitable contribution can sometimes be just as important as the amount you give.
5. Evaluate a Roth Conversion
If you have assets in a traditional IRA, year-end can be a good time to evaluate whether converting a portion to a Roth IRA fits within your long-term tax strategy.
A Roth conversion generally creates taxable income in the year of the conversion. In exchange, qualified Roth IRA withdrawals in retirement can be tax-free. Conversions can be particularly worth evaluating during years when taxable income is temporarily lower than normal. However, increasing taxable income through a conversion can have other consequences, including potentially affecting Medicare premiums and other income-based tax provisions.
Rather than asking, "How much tax can I avoid this year?" a better question may be, "When is the most advantageous time for me to pay the tax?"
Why it matters: Roth conversion planning is generally about managing taxes over many years, rather than simply minimizing this year's tax bill.
6. Maximize Retirement Contributions
Fall is also a good time to check how much you've contributed to your workplace retirement plan.
For 2026, employees generally can contribute up to $24,500 to a 401(k), 403(b) or governmental 457 plan. Participants age 50 and older may be eligible for an additional $8,000 catch-up contribution, while participants ages 60 through 63 may qualify for a higher $11,250 catch-up contribution.
The 2026 IRA contribution limit is $7,500, plus a $1,100 catch-up contribution for individuals age 50 and older, subject to applicable rules and income limitations. Increasing pre-tax workplace-plan contributions may reduce current taxable income, while Roth contributions don't provide an upfront income-tax deduction but may provide tax-free qualified withdrawals later.
2026 planning note: Certain higher-income employees making catch-up contributions are subject to new Roth catch-up requirements beginning this year, so participants should review their plan and individual circumstances.
Why it matters: Retirement contributions can accomplish two objectives at once—building long-term retirement savings while potentially providing valuable tax-planning opportunities.
Key Reminders on 2026 Contribution Limits
- Increasing contributions annually helps keep pace with inflation. Even though increases may appear modest (often $500–$1,000), gradually raising contributions can meaningfully strengthen long-term savings—especially when combined with employer matching dollars.
- Catch-up contribution increases are a valuable opportunity. For individuals age 50+, the higher catch-up limit allows you to accelerate retirement savings during peak earning years. This can help close potential gaps and boost future retirement income.
- Small adjustments now can lead to meaningful growth over time. Even increasing contributions by just the annual limit amount (for example, $40–$100 per month) can compound significantly over decades, especially when invested steadily.
7. Review RMDs and QCDs
For clients who are subject to Required Minimum Distributions (RMDs), fall is a good time to make sure the year's required distribution has been addressed. Charitably inclined IRA owners should also consider whether a Qualified Charitable Distribution (QCD) may be appropriate.
Individuals age 70½ or older may generally make a QCD by directing an eligible distribution from an IRA directly to a qualifying charity. A properly completed QCD generally can be excluded from taxable income and may also count toward an individual's RMD for the year.
Unlike a traditional charitable contribution, the tax benefit of a QCD doesn't depend on itemizing deductions.
Why it matters: For eligible investors who already plan to give to charity, a QCD may provide an efficient way to combine charitable giving with retirement-income and tax planning.
