The Fourth-Quarter Decision Calendar: What Should Be Settled Before December 31
Ask most families when year-end planning happens and they'll say December. That's when the deadlines fall, and it's why so much of the work ends up rushed.
Many December 31 decisions need weeks of lead time. Moving appreciated stock to a charity takes paperwork on both ends. A Roth conversion only makes sense once you know roughly what the year's income will be. And your CPA and custodian are working through the same crowded calendar you are.
This year, October matters more than usual. 2026 is the first tax year under several provisions of the July 2025 tax law, and some familiar strategies now work differently.
Begin With This Year's Income
Before deciding anything, estimate where the year will land: salary and bonus, equity that has vested or will vest, business distributions, realized gains, and retirement withdrawals. Then note which of those you can still influence.
The answer changes the advice. A family that sold a business this year may be looking for deductions. A couple in their first full year of retirement, with unusually low income, may want to add income on purpose through a Roth conversion or by realizing gains.
Charitable Giving Has New Rules
If you itemize, charitable gifts are now deductible only above 0.5% of adjusted gross income, and households in the top bracket get a smaller benefit from itemized deductions. At $1 million of income, the first $5,000 you give produces no deduction.
That's no reason to give less, but it is a reason to look at how you give. Gifts of appreciated stock still avoid capital gains tax on the growth, and a donor-advised fund can still group several years of giving into one.
If you're 70½ or older, look closely at qualified charitable distributions. Consider a hypothetical retired couple, both 74, who give about $20,000 a year and take required distributions from their IRAs. Writing checks may produce little tax benefit, especially if they don't itemize. Sending the same $20,000 directly from an IRA keeps it out of their income, counts toward their required distribution, and isn't affected by the new limits. In 2026, each IRA owner can give up to $111,000 this way.
Start early. A transfer that takes days in October can take weeks in late December.
Retirement Account Deadlines
Required minimum distributions are generally due by December 31 if you're 73 or older, and Roth conversions must be done within the calendar year.
Size conversions carefully. Beyond the tax bracket, Medicare sets premiums for higher earners using income from two years earlier, so a large conversion or gain this year may raise what you pay in 2028.
If you're 50 or older and still working, check your catch-up contributions. Starting this year, anyone whose prior-year wages from their employer exceeded $150,000 must make them as Roth contributions.
If you're on Medicare, open enrollment runs October 15 through December 7.
Gains and Losses
Look at gains and losses across all taxable accounts together. A gain from trimming a concentrated position or a fund's year-end distribution may be offset by losses elsewhere. In a low-income year, realizing some gains on purpose can make more sense.
Executives and Business Owners
Deferred compensation elections for next year are generally due by December 31. Stock that vests late in the year is often under-withheld, and anyone considering an incentive stock option exercise should model the alternative minimum tax first. Its exemption now phases out at lower incomes than it did last year.
Business owners should settle retirement plan contributions, the timing of bonuses and distributions, and major purchases with the company's CPA before the CPA's calendar fills.
Gifts and the Estate Plan
Annual gifts to children, grandchildren, or trusts should be completed by December 31. The 2026 exclusion is $19,000 per recipient, and unused amounts don't carry over.
The federal estate and gift tax exemption is now $15 million per person, and the scheduled reduction many families planned around never happened. That's welcome certainty, but it doesn't update your documents. Check beneficiary designations, account titling, and whether trusts were actually funded.
A Simple Calendar
October: Estimate the year's income. Review conversions, option exercises, and open enrollment.
November: Meet with your CPA. Start charitable transfers and submit deferral elections.
December: Finish distributions, conversions, and annual gifts by December 31.
January 15: Make the final 2026 estimated tax payment.
Most of these decisions affect each other. A charitable gift changes how much you might convert. A conversion changes Medicare premiums two years out. Starting in October gives your advisor, CPA, and attorney time to look at the same numbers together and still act on what they find.
Sources
Charitable deduction floor of 0.5% of AGI: Public Law 119-21, Sec. 70425
Top-bracket limit on itemized deductions, alternative minimum tax phase-out, $19,000 annual gift exclusion and $15 million estate exemption: IRS, 2026 tax inflation adjustments
Qualified charitable distribution limit of $111,000 and Roth catch-up wage threshold of $150,000: IRS Notice 2025-67; IRS, Catch-up contributions
Required minimum distributions at age 73, due December 31: IRS, Required minimum distributions
Medicare premiums based on income from two years earlier: Social Security Handbook § 2504
Medicare open enrollment, October 15 to December 7: Medicare.gov
Deferred compensation elections due by December 31: 26 CFR § 1.409A-2
Final 2026 estimated tax payment due January 15, 2027: IRS Form 1040-ES (2026)
Advisory services are only offered to clients pursuant to a written advisory agreement. Investment advisory services offered through Prosperitus Wealth Advisors, LLC, a Registered Investment Advisor. This article is for educational and informational purposes only and should not be considered investment, tax, or legal advice. It is not a recommendation to buy or sell any security or to adopt any particular strategy. Investing involves risk, including the possible loss of principal. There is no guarantee that any strategy will achieve its objectives. Please consult with a qualified professional regarding your specific situation. Additional information, including the firm's Form ADV, is available upon request.
