Note: Catch-up contributions can either be made on a pre-tax, or post-tax (Roth) basis, depending on what your specific plan allows. However, beginning in 2026, individuals making $145,000 or more can only make catch-up contributions on an after-tax (Roth) basis.
Deadlines to Keep in Mind: December 31 each year.
Consider Contributing to a Health Savings Account
A health savings account (HSA) can be a great way to help you set money aside for healthcare expenses in retirement, but it also offers several tax advantages today. Here’s why HSAs are
sometimes called the “triple tax advantage”:
- Contributions are pre-tax (or tax-deductible) – just like your retirement plan
- Growth is tax-free; any interest, dividends or investment gains are not taxed
- Withdrawals are tax-free when used for qualified medical expenses (things like doctor visits, prescriptions, dental, vision, or even over-the counter items)
Deadlines to Keep in Mind: December 31 of each year.
Note: While many employers offer an HSA benefit, yours may not. Be sure to confirm whether an HSA is available to you. Even if an HSA is not available through your employer, you may still be able to contribute to an HSA directly if you have a high-deductible health plan.
Avoiding Tax Penalties
Two of the most common, and costly, retirement account penalties to watch for are:
- Early Withdrawals: If you withdraw funds before age 59½, you will be subject to a 10% early withdrawal penalty
- Required Minimum Distributions (RMDs): If you’re 73 or older in the current year, the Internal Revenue Service (IRS) requires that you take a calculated portion from your retirement account by December 31 (with an exception for your very first one, which can be delayed until April 1 of the following year)
- Missed RMDs may trigger a penalty of up to 25% of the amount not withdrawn, plus income tax owed on the distribution
- The IRS provides worksheets and calculators to help determine your required withdrawal amount, and your retirement plan recordkeeper may also help calculate your RMD amount
To calculate the amount that you must withdraw, see Retirement topics – Required minimum distributions (RMDs) | Internal Revenue Service
Deadlines to Keep in Mind: RMDs from traditional IRAs and most workplace plans must be taken by December 31(first-time RMD takers may have until April 1 of the following year)
Other Year End Considerations
- Roth vs. Pre-Tax: If you expect higher tax rates in the future (e.g., in retirement), consider Roth contributions now so that you’ll pay taxes today but avoid them later
- Consolidating Old Accounts: If you have retirement accounts from previous employers, consider consolidating for easier management and potentially reduced fees
- Charitable Giving from Retirement Accounts (Qualified Charitable Distributions, QCDs): If you are age 70½ or older, you can donate up to $108,000 per year directly from your IRA to charity, reducing your taxable income and satisfying your RMD
Action Items for Participants
For participants who are still employed:
- Review your year-to-date contributions to see if you can afford to contribute more, and
adjust your contribution amounts to take advantage of additional tax deductions
- Check your eligibility and status for catch-up or super catch-up contributions
- Review and update beneficiary designations
- Gather and organize tax documents related to your retirement accounts
For participants in retirement:
- Confirm you’ve taken (or scheduled) your annual RMD, if applicable
- Review and update beneficiary designations, as even in retirement, it is important to keep this information current
- Gather and organize tax documents related to your retirement distributions
