Year-End Retirement Reminders
By Ben Barchilon, CPA
Versant Capital Management’s holistic family office approach integrates investment portfolio strategies, wealth management, income tax planning, estate and transfer planning, asset protection, next-gen financial education, family governance, and business succession planning.
With year-end fast approaching, there are several things to consider on the retirement planning front.
Required Minimum Distributions (RMDs)
The IRS calculates RMDs by taking the balances of your tax-deferred retirement accounts at the end of the prior year and dividing the total by a number based on your life expectancy factor.
RMDs are generally required starting at age 73 for most retirement accounts, but the specific age depends on your birth year. You must take your first RMD by April 1 of the year following the year you reach your required beginning age, and all subsequent RMDs are due by December 31 of each year. RMDs are no longer required from designated Roth accounts.
Some people need help remembering to pay quarterly estimated taxes. One way to address this is to have all or part of your distributions go to federal and state estimated tax payments at year-end. The IRS views the payment as if it were made throughout the year, so you avoid an underpayment penalty. This will allow you to keep your money that’s outside of retirement accounts that would typically be used to pay these estimated tax payments.
Qualified Charitable Distributions (QCDs)
QCDs from Traditional IRAs are available to taxpayers aged 70½ or older, up to $108,000 per individual in 2025. This means that a total of $216,000 could be given to charity and excluded from adjusted gross income if married filing jointly. Each spouse must give $108,000 from their own IRA accounts to take advantage of maxing out the QCD strategy. QCDs can also satisfy any required minimum distributions noted above. QCDs also do not require itemizing deductions.
Health Savings Accounts (HSAs)
HSAs are available to participants enrolled in high-deductible health insurance plans. At the federal level, contributions to HSAs are not subject to income tax. Limits for HSA contributions for 2025 are $4,300 for individual coverage and $8,550 for family coverage. A $1,000 catch-up contribution is allowed for those 55 or older. Contributions to HSAs can no longer be made after enrolling in Medicare (eligibility for Medicare begins at age 65).
Distributions are tax-free if they are used for qualified medical expenses. However, an advantage of an HSA is that there are no annual distribution requirements, time limits on use, or required account termination. These factors theoretically allow the HSA to grow in perpetuity. This can make an HSA a powerful retirement-planning tool. Investors who can afford to do so can contribute during their working years, with current medical expenses paid out of pocket.
The contributions are invested and allowed to grow until retirement, when the HSA is used to cover qualified medical expenses and is distributed tax-free. This strategy can help maximize deductible medical expenses during working years and may provide a source of triple-tax-free income in retirement. HSAs can also serve as a tool for mitigating rising medical costs in retirement, particularly when other assets, such as Roth IRAs or brokerage accounts, are used to pay for these costs.
Employer SEP IRAs
Self-employed individuals or small business owners can also take advantage of retirement plans. With a SEP IRA, employers can contribute up to 25% (or the plan’s contribution rate) of compensation or $70,000 in 2025, whichever is less. Employers can also contribute to a SEP IRA for their own benefit. The maximum contribution for self-employed individuals is based on their net self-employment earnings, but is limited to $70,000. There are no catch-up contributions for SEP IRAs.
The deadline for making these contributions for the 2025 tax year is after December 31, 2025. The contributions to these accounts must be completed by the filing deadline, including extensions, to make the contribution.
Traditional & Roth IRAs
Contribution limits for Traditional and Roth IRAs are $7,000 for those younger than age 50 and $8,000 for those 50 and older. 2025 IRA and Roth IRA contributions may be made until April 15, 2026. Be sure to check on the deductibility of traditional IRA contributions and/or can contribute directly to a Roth IRA. Additional plans are available for self-employed individuals.
Employee Retirement Plan Contributions
Maximizing retirement plan contributions can be considered a beneficial year-end tax strategy. Combined limits for 401(k) or 403(b) deferral contributions are $23,500 for those younger than age 50, $31,000 for those 50 and older, and $34,750 for those ages 60-63, if their plan allows. These employee contributions must be made by December 31, 2025.
If you are self-employed and have a Solo 401(k), additional contributions can be made to the 401(k), subject to the $70,000 limit (similar to SEP IRA limits above). This $70,000 limit does not include your employee catch-up contributions of $7,500 for those 50 or older or $11,250 for those ages 60-63.
Employer contributions can be made after 12/31/25. The contributions to these accounts must be completed by the filing deadline, including extensions.
The provisions addressed here illustrate how retirement accounts, charitable strategies, and tax-advantaged vehicles interact as part of a year-end retirement planning. Understanding the rules and deadlines can help you navigate the months ahead with heightened clarity. A qualified professional can help you assess how these options may fit into your broader wealth plan.
Ben Barchilon, CPA, is a wealth advisor at Versant Capital Management, where he advises families in developing tax-efficient strategies to reach their goals. Ben has experience working with small business owners, multi-generational wealth, and families from diverse backgrounds.
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