December 31 isn't a suggestion. It's a wall.
Once the clock runs out on New Year's Eve, a long list of money-saving opportunities disappears forever. No extensions. No do-overs. The IRS doesn't care that you meant to do it — it only cares whether you did it before midnight.
Every December, millions of Americans leave free money on the table, pay taxes they didn't have to pay, and miss windows that won't open again for a full year. Don't be one of them.
Here are the 7 money moves to make before December 31, 2026 — including the one most people miss entirely.
1. Max Out Your 401(k) — Check Your YTD Contributions Now
For 2026, the 401(k) contribution limit is $24,500. If you're 50 or older, you can add a $8,000 catch-up contribution. And if you're between ages 60 and 63, there's a special $11,250 super catch-up on the table.
Log into your 401(k) account today and check how much you've contributed so far this year. Then do the math: take the limit that applies to you, subtract what you've already contributed, and divide by the number of paychecks you have left.
That's how much you need to contribute per paycheck to max out. If you can afford to bump your contribution rate for the last few pay periods, do it.
And even if maxing out isn't realistic, here's the absolute minimum: contribute enough to get your full employer match. Missing your full match means walking past free money every single paycheck — no investment in the world beats that return.
Not sure whether a 401(k) or Roth IRA is better for your situation? Read our full breakdown: Roth IRA vs 401(k): Which One Makes You Richer? (2026 Guide)
2. Take Your Required Minimum Distribution (RMD) — Or Face a 25% Penalty
If you're 73 or older, this one is non-negotiable.
The RMD age rules: if you were born between 1951 and 1959, RMDs start at age 73. If you were born in 1960 or later, they start at 75. Once you hit that age, the IRS requires you to withdraw a minimum amount from your traditional 401(k), traditional IRA, and similar retirement accounts every year — by December 31.
Miss the deadline, and the penalty is brutal: a 25% excise tax on the amount you failed to withdraw. That's not a typo. Skip a $20,000 RMD and you owe the IRS $5,000 — on top of the income tax you'll owe when you finally take the distribution.
Check with your account custodian to confirm your RMD amount and make sure the withdrawal processes before December 31. Don't wait until the last week — processing delays happen, and the IRS doesn't accept "my broker was slow" as an excuse.
3. Harvest Your Tax Losses — Turn Losers Into Tax Savings
Tax-loss harvesting is one of the most underused strategies in personal finance. Here's how it works: if you have investments that are down, you can sell them before December 31 to "realize" the loss — and then use that loss to offset capital gains you've earned elsewhere this year.
Sold a stock for a profit? That gain is taxable. But if you also sold a loser at a loss, the loss cancels out the gain dollar for dollar. You can use losses to offset gains, and if your losses exceed your gains, you can deduct the difference against your ordinary income too.
The key rules:
- Sell by December 31. The sale has to happen in 2026 to count for the 2026 tax year. A trade placed on January 2 counts for 2027 — too late.
- Watch out for the wash-sale rule. You can't sell a stock for a tax loss and then buy it (or something substantially identical) back within 30 days before or after the sale. If you do, the IRS disallows the loss.
- Review your whole portfolio. Check your taxable brokerage accounts — not your 401(k) or IRA, since those are already tax-advantaged and losses there don't help you.
Pull up your brokerage statements, look for positions sitting at a loss, and decide whether harvesting makes sense before the year closes.
4. The Move Most People Miss: Roth Conversions Must Finish by December 31
This is the one that slips past almost everyone.
A Roth conversion means moving money from a traditional IRA or 401(k) — where withdrawals are taxed in retirement — into a Roth IRA, where qualified withdrawals are tax-free. You pay income tax on the converted amount now, but all future growth and withdrawals are tax-free.
Why would you do this? A few powerful reasons:
- You're in a lower tax bracket this year. Maybe you retired early, took a sabbatical, or had a low-income year. Converting now means paying tax at today's lower rate instead of a higher rate later.
- You want tax-free income in retirement. Roth withdrawals don't count as taxable income, which can also keep your Medicare premiums lower and reduce taxes on Social Security benefits.
Here's the critical part: the conversion must be completed by December 31, 2026 to count for the 2026 tax year. Unlike IRA contributions (more on that below), there is no extension to April. Miss the deadline and the window closes for a full year.
This is also a move to coordinate with your tax advisor, because the converted amount adds to your taxable income — converting too much at once can bump you into a higher bracket. Many people do partial conversions over several years to manage the tax hit.
Want to understand the Roth side of the equation better? See: Roth IRA vs 401(k): Which One Makes You Richer? (2026 Guide)
5. Spend Down Your FSA — Use It or Lose It
If you have a Flexible Spending Account (FSA) through your employer, check your balance right now.
Most FSAs are use-it-or-lose-it: any money left in the account on December 31 goes back to your employer. You earned that money. Don't donate it back.
Some employers offer a small grace period (usually until March 15 of the following year) or allow a limited rollover amount. Check your specific plan rules — but don't assume you have either. The default is that unspent funds vanish.
Smart ways to spend down an FSA before the deadline: schedule dental cleanings, eye exams, or physicals you've been putting off; stock up on prescriptions; buy eligible over-the-counter items like first-aid supplies and reading glasses; get new glasses or contacts. Make a list, check what's eligible under your plan, and spend it before it evaporates.
Note: this applies to FSAs, not HSAs. For 2026, HSA contribution limits are $4,400 for self-only coverage and $8,750 for family coverage — and unlike FSAs, HSA money rolls over forever and stays yours. If you have an HSA and haven't maxed it, that's another move worth making before year-end.
6. Bunch Your Charitable Giving With a Donor-Advised Fund
If you give to charity and want the tax deduction for 2026, the donation must be made by December 31. Donate on January 1 and it counts for 2027 — a full year of waiting for the tax benefit.
But there's a smarter strategy many people don't know about: bunching with a donor-advised fund (DAF).
Here's the idea. Instead of donating a little each year, you "bunch" several years of charitable giving into one big donation in a single year. That big donation pushes you over the threshold where itemizing deductions beats the standard deduction — so you actually get a tax benefit from your giving.
A donor-advised fund makes this easy: you contribute cash or appreciated stock to the DAF before December 31, 2026 and get the full 2026 tax deduction, then distribute grants to your favorite charities over the coming years on your own schedule. Donating appreciated stock is especially powerful — you get a deduction for the full market value and avoid capital gains tax on the appreciation.
Even if bunching isn't for you, the basic rule stands: any 2026 charitable deduction requires the gift to be completed by December 31. Write the check, make the transfer, or click donate before midnight.
7. What CAN Wait: IRA Contributions Until April 2027
Here's some good news to balance the urgency: not everything has a December 31 deadline.
IRA contributions for the 2026 tax year can be made all the way until Tax Day in April 2027. That's true for both traditional and Roth IRAs. So if you're short on cash right now or still deciding between traditional and Roth, you have breathing room.
This is a genuine exception — and it's exactly why it's worth knowing which deadlines are hard (Roth conversions, RMDs, 401(k) contributions, FSA spending, charitable gifts, tax-loss sales) and which one gives you extra months.
Use the breathing room wisely. If you haven't opened an IRA yet, you still have time. If you're deciding how much to contribute, you can make the call in early 2027 with full knowledge of your 2026 income.
Your December 31 Checklist
Don't let the list overwhelm you. Here's the quick version:
- Check 401(k) contributions YTD — bump up to hit the $24,500 limit (plus $8,000 or $11,250 catch-up if eligible)
- Confirm you've captured your full employer match
- Take your RMD if you're 73+ (25% penalty if missed)
- Sell losing investments for tax-loss harvesting by Dec 31
- Complete any Roth conversions by Dec 31
- Spend down your FSA balance
- Make 2026 charitable donations (consider a donor-advised fund for bunching)
- Relax about IRA contributions — you have until April 2027
December 31 comes whether you're ready or not. The people who build real wealth aren't necessarily the ones who earn the most — they're the ones who don't leave money on the table.
Before you go, make sure your safety net is solid heading into the new year: Emergency Fund: How Much You Really Need (And How to Build It Fast)
Disclaimer: This article is for educational and informational purposes only and is not financial, tax, or legal advice. Tax laws and contribution limits change, and your personal situation may differ. Always consult a qualified financial advisor or tax professional before making decisions about retirement accounts, conversions, or tax strategies.
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