Year-End Tax Planning & Tax-Smart Retirement Withdrawal Strategies

In today’s episode, we’re tackling some big topics relating to year-end tax planning:

📑 Filing vs. planning – April files the return; December sets the strategy.

💰 Max out contributions – 401(k), HSA, IRA, and catch-up opportunities.

🎁 Charitable giving – Donor-advised funds and bunching strategies can cut your tax bill.

🏥 Healthcare choices – Open enrollment decisions can save thousands.

🧾 Legislative updates – New senior deduction and higher SALT cap change the math in 2025.

Listen Now:

The Smart Take:

0:00 – Intro

2:49 – Tax planning vs tax prep

4:22 – Year-end meetings

9:49 – Check in on goals

12:47 – Contribution options

15:22 – Big Beautiful Bill impact

18:59 – Looking ahead to next year

 

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The Hosts:

Kevin Kroskey, CFP®, MBA – About – Contact

Tyler Emrick, CFA®, CFP® – About – Contact

Episode Transcript:

Tyler Emrick:

In today’s episode, we’re talking about year-end planning items before the holiday season gets in full swing. We’ll talk a little bit about what True Wealth Design covers in their year-end tax and investment review meetings, what you should be looking for to finish out the year strong and accomplish the goals that you want. And how you should take a peek at the year ahead, so you’re ready for what’s upcoming.

Walter Storholt:

Hey, it’s another episode of Retire Smarter. Walter Storholt here with Tyler Emrick, a CERTIFIED FINANCIAL PLANNER, a chartered financial analyst, and also of course, one of the wealth advisors at True Wealth Design. Helping folks get to retirement with solid financial plans and all the way through that journey as well, working with families across Northeast Ohio, but also all over the country as well.

And Tyler, going to be a great episode today. Everybody else is still wanting to enjoy the rest of fall. You’ve got your attention turned to the end of the year and looking at taxes for next year, and all that kind of stuff.

Tyler Emrick:

I do. I do.

Walter Storholt:

So you’re always staying one step ahead of us. That’s a good thing.

Tyler Emrick:

Try to. Hey, I’m just happy we’re a little bit ahead of the game. We’re early September here, mid-September. We’re already starting to get prepped and start thinking about those year-end tax items and planning items that families should be thinking of. So I think this is a pretty regular occurring episode for us. Most years, we try to take an inventory and help families think about what their year-end should look like and the items they should be focused on. So yeah, it should be a pretty good one here today, for sure.

Walter Storholt:

Yeah. Well, I’m looking forward to diving in with you because we’ve had some big things happen this year in the financial planning world. One of those, of course, being the One Big Beautiful Bill, which we’ve done several episodes on. And so that’s just one element to the equation. But yeah, if there’s ever a year to do a refresh of this topic, I think this is one to do, right?

Tyler Emrick:

It is perfect. Yeah. The One Big Beautiful Bill certainly throws a wrinkle into some things. And for even those families that they go through these exercises at the end of each year and do take an inventory of where they’re at, this one’s going to be a bit unique. And certainly there’s probably some things in the bill that’s going to impact just about everybody. So understanding what that is, the impact of it, that’s what that year-end planning is really all about. Frankly, I don’t know, Walt, I think I’m hitting almost seven, eight years now at True Wealth.

And every year, the Q4, so the fourth quarter is the busiest time of year for us with these year-end tax items. We do have a pretty hard deadline. Once December 31st gets behind us here, we move on to the next year. It’s a new tax year. That’s all the things that we were trying to accomplish if we didn’t get them done, and that deadline is looming. So we’ve got to fit in quite a bit of planning here by the end of the year. I always equate it to my CPA friends. Theirs is April, April, April, got to get it done by April. For us, we’re a little bit more forward thinking, trying to get those items in place for the upcoming year.

So ours is year end. So always a fun time of the year.

Walter Storholt:

That highlights the key high difference. I was going to bring that up CPAs or when someone, maybe a lay person hears tax planning or taxes, we’re thinking of that April date. For you guys, it’s a little bit different from that CPA world. It’s the end of the year, that’s the big important part because that’s the difference between tax filing, which we do in April. And tax planning, which yes is year round, but the end of the year typically has the most deadlines, right?

Tyler Emrick:

No, absolutely. You hit the nail on the head there, for sure. It’s shifting that mindset and that mentality from just filing and completing the documents. Even in the past, you go to your CPA, you go to your accountant. You hand them your docs and they do what they can to try to save you as much as possible. But once those docs are set in stone, there’s not a whole lot they can do. As long as they file the return appropriately and complete it in the way that they should, there’s not much else beyond that. The items that we’ll talk about today and we start thinking of and start planning for, these are really truly things that you can shift and change that have ramifications and trickle down as you think about how that return’s going to look here.

So always a fun time of year, a busy time of year. And as I think about just True Wealth Design and the meetings that we’re getting ready to do here in Q4, we do label it, I think I even said it before, tax and investment reviews, what we call these year-end meetings, but they’re really getting ready to come up in full swing. And as I think about what we’re trying to accomplish and the things that we think are important, we’ll certainly share some items I think that should be on everybody’s list. But to give a little bit of framework for what that might be like for the listeners who maybe aren’t working with True Wealth. I always think back to a meeting that I had actually a couple years ago with a family I’d worked with for a number of years.

And the reason why that one sticks out is because, well, for every meeting that we have, most of them anyway, 99% of them, we have meeting agendas where we’re prepping beforehand and getting that out. And for these year-end meetings, maybe that’s a page, page and a half. It’s a meeting agenda summary, so hopefully shortened key point items. I think theirs was over three and a half pages. So I’ll never forget when we printed that one off, we’re like, “Oh, my. I don’t even know if I can call this a summary anymore,” because there was quite a bit going on in their situation. And if I just share a little bit about what was on there, they had a lot going on.

It was actually a year where one of the spouses actually retired. So we were putting our forward-thinking hat on and looking at the upcoming year saying, “All right, our income’s gone away. What are we going to live off of? Where’s that money come from? What are we trying to accomplish from a spending standpoint on the upcoming year?” Which in itself is a pretty big conversation. But then also one of the spouses was getting ready to turn 65 early in that upcoming year. So there’s all sorts of ramifications for that age, of course, healthcare. So we had to walk through and think through, well, what Medicare plan are we going to go on? What does that application process look like? What do we need to make sure gets done in a timely manner to make sure there’s no penalties or anything like that?

And then the spouse was actually under 65 and didn’t turn 65 until the following year, so her healthcare options were significantly different. She couldn’t go on to Medicare. So we were looking at evaluating, well, do we stay on COBRA? Which of course, that’s the healthcare that they had afforded to them. Once you have retired, you can get it for 18 months. It’s generally the same healthcare that you would have through your employer, but it can be a bit pricey. Or do we maybe shift over to an individual healthcare plan on the ACA? And for any long-time listeners, when I start talking about ACA plans, they probably think, oh, subsidies, keeping income down low. And that has some big ramifications as you think about how you manage that upcoming year.

So quite a bit of levers that we had to work through there. Oh, and by the way, they’re very charitably inclined. So we had to figure out, well, did we want to actually start funding their donor revised fund? Again, donor revised funds a term we’ve heard probably quite a bit here on the podcast. But those are charitable accounts that allow you to essentially gift assets to them in a particular year and you get a deduction for that, but the gift doesn’t have to go to the church or charity at that time. You can use the donor advised fund to spread out those gifts over one, two, three, four years. And a lot of the families that we work with, that’s a big part of their tax planning strategy. So these guys were no different.

But retirement, healthcare decisions, year-end tax items, the whole gamut as I think about their situation. But it sheds a little bit of light into, well, what are some of the topics that are going to get added to that meeting and what are we trying to focus on? And I think it sheds a pretty good light into, if you’re thinking about your own situation, where would you start? What would you want to be taking a look at? Those are some of the items that were on that docket.

Walter Storholt:

Yeah. It’s kind of interesting because I would imagine that this whole tax planning journey that you go down looks one way for a new client, and then very different for just follow-up reviews for folks. So probably this would be no surprise that it’s much more in depth this first time through or that first year of retirement for somebody when they’ve got all these changes happening. Nonetheless, you’re still doing these things, right?

Tyler Emrick:

Well, you got the changes. There’s families that we’ve worked with for a number of years where maybe these meetings are just one-page meeting agendas. We’re going through, we’re ensuring some items, which we’ll touch on some of those items here later on the podcast. And it’s a little bit more rinse and repeat. But then all of a sudden, boom, you have an event. Something happens, and then all of a sudden these things get blown out and you’re faced with a multitude of decisions in some cases. I think about all the decisions that family had to go through and we had to talk through and just making sure that everybody was on the same page. It can get quite lengthy and certainly you want to be on top of those.

In other years, maybe it’s not as much. Maybe a lot of those decisions have already been made and we are, is the plan working out the way that we expect it to? And what’s our to-do list and our check-off items? I was also argued too, well, where you’re at in your life changes these meetings quite a bit as well. A retiree or someone heading into retirement like we just talked about, might have different items and objectives that they have on theirs versus someone who is still working, has W-2 and has a few other or some different objectives. I think over the remainder of the podcast here, I think that’s probably where we should spend most of our time.

In preparation, I was looking in all these top 5 lists and top 10 lists of, what items do you need to get done before the end of the year popped up? And they’re great. So I thought it would be good for us to maybe just go through, well, what’s True Wealth’s top list? What do we think you should be looking at and should be on your items as you head into this fourth quarter and starting to think about, well, have I accomplished all my goals where I’m at? And frankly, that’s probably the first thing that I think should be on anyone’s list. While it is taking a look back over the year and saying, “well, what goals was I trying to accomplish? And did I meet them? What ones do I still have outstanding, and how would I accomplish it?”

So I’m thinking about for an individual for example, that’s still working. These could be pretty simple things. Things like, “Am I still on track to max out my 401(k)? Am I still on track to max out my HSA? Do I need to make some adjustments to those contributions before the end of the year?” This year’s quite a bit of a unique year as we think about retirement plan contributions. They got that super catch up for individuals between 60 and 63 to where you’re able to put in even more than the typical contribution limits to your retirement plans and catch up. If you’re an individual that’s between 60 and 63 this year and you haven’t made adjustments to your contributions, to your retirement plans because you thought you were already maxing out, well, you might have a little bit more room in there for you to put a little bit more money back.

So understanding like, well, what I set up earlier in the year, is that still going to accomplish some of those goals? And are we going to come out ahead and meet what we want to there?

Speaker 3:

What would your life look like if you designed it around your true wealth? It’s a powerful question. And one that True Wealth Design helps individuals, families, and business owners answer every day. With a fully integrated approach to financial planning, tax strategy, investments, and business advisory. Their team can bring clarity and confidence to every part of your financial life. Take the first step toward a stronger financial future with the a no-cost, no-obligation discovery meeting. Just click the link in today’s show description to get started.

Walter Storholt:

Yeah, makes a lot of sense. I love the idea of starting with the goals. It makes complete sense.

Tyler Emrick:

Absolutely. And those are nice, easy ones. You get a pay stub? All right, let’s write it out. How much have I put in my retirement plan? How much have I put in my HSA or flexible spending account, or any of those things that you’re traditionally saving in? Have I done my Roth IRA contributions or IRA contributions and gotten those in? This is a wonderful time to take an inventory of that and making sure that you’re on pace. I literally just-

Walter Storholt:

[inaudible 00:12:40] a few paychecks to go out the rest of the year where we can make some fixes if we were off track on something, right?

Tyler Emrick:

Absolutely. To your point, just last week, I spoke with an individual. We jumped on a 15-minute call, and really we just wanted to do that. We took a look at your pay stub. I ran a quick analysis and seen what she was projecting for. It was good because she was on track to meet the max. So we were right on track for what we thought. But we had a pretty productive conversation around after-tax contributions inside the 401(k) and saying, “Should we maybe start doing some of those contributions?” We’ve already hit the max that we can to the plan pre-tax and Roth. There’s this other bucket over here of after tax where we can put back another 20, 30 grand. Do we want to over the last handful of paychecks, make a contribution in there and start utilizing that as an option?”

And she ended up doing that and we made the quick adjustment and got it changed. So this is a perfect example of that inventory of like, well, where are we at? What are we tracking for from there? I was talking about the story from the family a few years ago and the retirement and everything they had going on. and I mentioned that donor-advised fund. That’s another great example of something that really, now is the time that you should be looking at that. If you’re thinking about using a donor-advised fund or a bunching strategy for your gifting this year and you don’t have a donor-advised fund opened up, but you need to, you probably should be starting that here pretty soon.

Those accounts take some time to get opened up, take some time to get funded. If you wait too long, you might be running into a situation to where you might not have enough time to get those contributions complete. A lot of times with those donor-advised funds, we’re gifting appreciated stock and ETFs and mutual fund positions. There’s some caveats there to get those over into the donor-advised fund. So you want to be mindful of that limit and not be bumping up into the time and be like, “Oh, shoot, I need to get this in. I need to get it changed.” Now is the time to certainly be looking at that type of stuff.

Walter Storholt:

Contributions to things can sometimes be last minute, but the opening of them can take a little bit of time. So if you don’t have it in place already, build in some buffer there.

Tyler Emrick:

You got it. The other items that I had listed out here were the things you should always be looking at, like, well, should we be looking at Roth conversions this year? We’ve got taxable accounts, should we be harvesting some losses inside of those accounts? Should we be taking some gains inside of those accounts? The charitable contributions, obviously we’ve talked about that as well. And I think that’s a pretty good comprehensive list that should probably be on most individual’s minds when they’re thinking about, have I got everything in for this year? I’ll make a couple of comments too with the One Big Beautiful Bill to your point.

The two big things I think that are going to impact families this year, or at least the families that are probably likely listening here to the podcast, the first of which would be the temporary senior deduction or that enhanced senior deduction. That’s the extra $6,000 per individual that you get if you’re over the age of 65. So if you’re married, both of you are over 65, you’re looking at about a $12,000 more of a deduction in 2025. To get that deduction though of course, as with anything, and the IRS likes to keep us employed, they make it complicated because that deduction is phased out over a certain income limit.

So what’s on the docket for us, and some of the prep work that we’re doing for our upcoming meetings, they’re saying, “Well, which families did we have that maybe we were targeting a higher amount of income this year for them for whatever reason? Do we need to evaluate and maybe bring down that income target to start picking up this extra enhanced senior deduction?” That’s coming in effect this year In the same lines of that, for individuals that are working, the salt deduction changes, SALT just stands for state and local taxes for those individuals that live in high-income tax states on the East Coast, West Coast, certainly some of them are splattered all over, but this is the cap on state and local taxes that you’re able to deduct.

This would be, again, income taxes, state taxes, property taxes, things like that, was $10,000. Well, again, that cap now is $40,000. Again, [inaudible 00:17:09]-

Walter Storholt:

Magnificent change.

Tyler Emrick:

Oh, absolutely. You talk about someone who was capped at 10K, but really they should have been able to deduct… now, they’re going to be able to deduct 40, $30,000 more of deductions. Well, that could take you from, I used to do the standard, now I’m itemizing. All right, if we’re itemizing now, there’s a whole other questions and caveats there of, well, how do we maximize that? Are we doing gifting? Do we need to keep track of that? Do we have a mortgage on our primary residence, and can we deduct the interest on that?

So if you’re going from the standard deduction to itemizing, adds a little bit of complexity, but you think about the tax savings that that might have for individuals this year that that’s applied to, that’s certainly a big deal. So I think those are a good starting point as we wrap up this whole idea of like, let’s take an inventory of where you’re at this year. What you’re tracking towards your goals, and does anything need to get done, accounts, set up, contributions made by the end of the year, changes to your retirement plan contributions, things like that? I think that’s a great wonderful thing to start with, for sure.

Walter Storholt:

Absolutely. By the way, it’s a great time to remind folks that if you’d like to meet with Tyler and the team at True Wealth Design to go over your financial plan. Before we reach the end of the year, you want to go through this kind of in-depth tax planning, as well as the bigger picture. Looking at your retirement plans, if you have questions about that or just your portfolio in general, any of those kinds of questions that might pop up in your mind, don’t hesitate to reach out. You can always do that by clicking the link in the description of today’s show. It’s also just simply at truewealthdesign.com. Look for the Let’s Talk button and you can schedule a 20-minute discovery call with the team. See if you’re a good fit to work with one another, very easy to do.

Again, link in the description if you want to click on that and get in touch with Tyler while you’re thinking about it. This is all great, Tyler, and I know you’re doing all of this great prep for the end of the year, but something tells me that this isn’t going to just be… these conversations and these meetings aren’t going to just be confined to this year. You’re going to likely be looking ahead as well as part of these conversations.

Tyler Emrick:

We do. And I would argue that’s almost just as important. And that’s kind of that idea of taking a peek at the upcoming year and making sure that your game plan is in place. If you’re still working, maybe getting close to retirement, but still working, plan to work through 2026, items that would be on your list for that peek into next year would be things like, open enrollment for a lot of families and individuals are going to be coming up here in the next month or two, October, November. And that’s where you obviously enroll in your employer benefits. We really should be taking that very seriously. As you think about, well, what type of retirement plans are going to be available to me?

We just did a podcast, maybe a couple months ago now on deferred comp. Do you have a deferred comp plan that’s available to you that you haven’t been using that maybe you want to? Should you maybe start switching your healthcare plans? A lot of employers would give you two options. More of a traditional, lower deductible type of healthcare plan, maybe a little bit higher cost and premiums though up front, versus a high deductible plan that maybe would give you the ability to do an HSA account. So making sure you’re looking at that seriously. So many times I’ve had conversations where individual’s like, “Ah, I just stayed on the plan. We use quite a bit of medical.”

But when you actually kind of peel back the onion a little bit and walk through, well, how much are you really using it versus the premiums that you’re paying? And you’ve got this other benefit here of doing an HSA, do you really need that traditional plan? Or would a high-deductible plan with a lower premium and an HSA contribution and some of the free money maybe your employer gives you as a contribution to that HSA, going to be a better path for you? I think a lot of times until you can get down into the actual numbers and break down the math, conceptionally it might feel like the safe option would be stay on a traditional plan.

But for a lot of individuals, that conversation or that analysis I think is proven to be very, very helpful. Also, enrollment into the 401(k), do I want to up my contribution percentages? What are the new limits? Do I need to adjust it? Do I need to adjust how much we’re putting in the HSA? So I think open enrollment is very, very important to a lot of families coming up here in the next couple of months that would be part of this year-end analysis and as we’re starting to think to the next year. If you’re potentially retired, I think that open enrollment themes extend out into, well, we’re coming up on open enrollment with Medicare, with individual healthcare plans. Do you need to start looking at what those plans, the plans that you’re currently on, maybe switching a plan?

Of course, we talked a little bit about it. If you’re on an individual healthcare plan right now, the way the subsidies work and the income planning that goes into that, is going to change quite substantially in 2026 versus what it is in 2025. How does that apply to you and do you need to be making maybe a switch from a healthcare plan standpoint? These open enrollment periods are a wonderful time to evaluate that and start looking at, well, what are the new prices for the upcoming year and these plans? And do we need to evaluate which one that you want and which one that you are using? Those typically start around mid-October and November, and then go into December a lot of times too.

So we’re really ahead of the game, getting ready to come up onto those and should be on the docket for individuals that maybe aren’t working and don’t have an open enrollment for the employer, but their benefits are in the form of Medicare or individual healthcare or something like that.

Walter Storholt:

You’re right. You’re covering a lot of levers that can be pulled as we look into the year ahead, which is great. I think we’re getting into some things that aren’t necessarily covered on those online five-point checklists and that kind of thing though.

Tyler Emrick:

Maybe some of the good ones got them sneaked in there. I don’t know. But yes, no, absolutely. Some of the things that are, I think, pretty common on those lists or hopefully is, is this idea of looking at the upcoming year from a spend standpoint. Especially for retirees and individuals looking at like, well, where’s my money going to be coming from at the upcoming year? How high do I want to be taking my income? Obviously we have all these new limits. We talked about one just earlier, the new bonus deduction for individuals over 65 and the income limits there. Is that going to change your income target as we think about the upcoming year?

Are you going to be subject to old IRMAA and Medicare surcharge and increasing your Medicare cost because your income’s too high? So I think looking at your spending first for the upcoming year. And then matching that with what you’re trying to accomplish from a tax standpoint and distribution standpoint and making sure those are married up, I think can be extremely valuable. Just earlier this week, we had a conversation with a family where she’s actually looking at potentially retiring here at the end of the year. And we did a breakdown of the upcoming year saying, “All right, this is the spending that we wanted to do. Can I fit in a little bit more home improvements? And if I can, where should that money come from and when?”

So when we think about that conversation, it’s like, well, this would be our income target for the year. This is what we need for just your normal living spending. Obviously we got to cover the taxes and make sure good old Uncle Sam gets paid. In her case, they had maybe 10 to 15K of wiggle room where they could take out some additional funds and use it, still be within the tax goals they’re trying to accomplish. And then we had a very conversation of like, “Well, is that going to be enough? Is it not? And are we going to have to maybe readjust that income target to accomplish what they want to?” Because at the end of the day, Walt, it’s not all about just making the financially maximizing decision.

Life happens. The reason why you save, hopefully, is to be able to do the things that you want and spend confidently and comfortably. And sometimes that spending doesn’t align perfectly for what you’re trying to do from a tax standpoint. And from an advisor standpoint, it’s my job and our team’s job is to say, “Well, how do we marry that decision and make sure that you are making it with, one, eyes wide open? And two, well, what are our alternative two and three? And what other levers could we potentially pull here to get the money that you potentially need and do it in the most, not only tax efficient way, but cost effective way as well?” So spending and income targeting and management, I think is really important for retirees.

And certainly can be important for individuals still working, especially if you’re an individual that is maybe not maximizing out your pre-tax retirement account. Do you want more pre-tax deductions or do you want to maybe switch your contributions over to Roth, to your retirement plan? I think are good conversations to have. If you’re still working, you still have one-time expenses that come up. How are you going to cover those? Which accounts are they going to come from? If you need financing, where are you going to go for that type of financing? So that’s the idea and the thought and the topics that we’re touching on when we say, “We want to peek into that next year. We want to get an idea or a game plan in place.”

Those are some of the items that come up top of mind that I wanted to rattle off and share. And that if you don’t work with a financial advisor, these should be on your list and you should be having conversations with them if you have a significant other to get a game plan in place for like, well, what does this look like? And how are we going to be using our wealth to make sure that we live the life that we want?

Walter Storholt:

Yeah, that’s a great wrap up of everything, Tyler. Looking at those goals, making sure that this checklist that you’re following through gets personalized to you, that you’re not just pulling it off the shelf because there’s things that are going to apply to you that don’t to somebody else. I think that’s all great things to remind folks of.

And the timing, one more time. We’ve got time this year. If you’re watching this shortly after this episode releases in late 2025 or September, 2025. there’s time before the end of the year, but let’s also be looking toward the following year. That’s the key. And so, if you don’t end up watching this episode for some reason until 2026 or beyond, a lot of the same principles still apply, take action, be doing tax planning, looking ahead because it can make all the difference.

Tyler Emrick:

Yep. We definitely believe it, for sure.

Walter Storholt:

Okay, excellent. Well, again, if you’d like to meet with Tyler and the team at True Wealth Design, very easy to do that. Just click the link in the description of today’s show. Whether you’re watching on YouTube or listening on your favorite podcasting app, you should be able to find that link. You’ll go to the website, truewealthdesign.com, after you click there and be able to schedule a time to visit.

If you see a Let’s Talk button, click that and schedule your time to meet. It’ll be a 20 minute discovery call, see if you’re a good fit to work with one another, and take next steps from there. You’ll speak with an experienced wealth advisor on the team when you do that. Tyler, thanks for all the great help on the episode today. We’ll look forward to catching up with you again soon.

Tyler Emrick:

Yeah. I will catch you on the next one. It was fun.

Walter Storholt:

All right. See everybody again, next time right back here on Retire Smarter.

Speaker 4:

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