This year has been full of major events. It began in January with the inauguration of a new president and the most destructive wildfires in Los Angeles’s history. A trade war soon followed, sparked by increased tariffs, and in July, Congress passed the One Big Beautiful Bill Act (OBBBA). In Septem ber and October, the Federal Reserve lowered interest rates, which preceded the longest federal government shutdown in U.S. history. Despite these shifts, the U.S. stock market reached record highs in 2025. While we can’t control changes in tax law or the economy, we can take steps to manage our personal finances. With that in mind, here are a few year-end topics worth reviewing. Itemized deductions This year, many taxpayers will reassess whether to itemize or take the standard deduction when filing their tax returns, given the new limits under the OBBBA. The act increased the state and local tax (SALT) deduction from $10,000 to $40,000, effective until 2029. People who live in states such as New York, California, and Connecticut — where state and local taxes are substantial — may find itemizing advantageous this year under the higher limit. However, the benefit begins to phase out when gross income reaches $500,000 and disappears entirely at $600,000. Retirement accounts If you participate in an employer-sponsored retirement plan, such as a 401(k) or 403(b), review the 2025 contribution limits and confirm that your savings strategy is on track. Contributions reduce taxable income and help build long-term financial security. 2025 contribution limits for employer-sponsored retirement plans (excluding a SIMPLE IRAs, which have lower limits): —Regular contribution: $23,500 ($24,500 in 2026) —Catch-up (age 50 or older): $7,500 ($8,000 in 2026) —Super catch-up (ages 60–63): $11,250 If maximizing contributions wasn’t feasible this year, consider adjusting early in the new year. Tax-loss harvesting Tax-loss harvesting is a tax-efficient investing strategy for taxable accounts. Retirement accounts do not qualify. To take advantage of this approach, you may consider selling certain investments at a loss to offset capital gains from other holdings. Eligible investments aren’t limited to stocks or stock funds, which means losses from bonds and other asset classes can also be used to offset gains. If your losses exceed your gains, you can apply the remaining losses to offset up to $3,000 of ordinary taxable income ($1,500 for married couples filing separately). Any amount more than $3,000 can be carried forward to future tax years. The tax impact of tax-loss harvesting can be significant for taxable account holders with high incomes. However, investors should proceed cautiously because of the IRS restriction known as the wash-sale rule. This rule states that if you sell a security at a loss and purchase the same or a “substantially identical” security within 30 days before or after the sale, the loss is generally disallowed for current income tax purposes. Tax-free 529-to-Roth IRA rollovers In 2024, a new law took effect allowing tax- and penalty-free rollovers from a 529 college savings plan to a Roth IRA, provided certain conditions were met. Taxpayers who have owned a 529 plan for more than 15 years may now take advantage of this option. Key rules include: —The lifetime rollover limit is $35,000 per person, not per 529 plan. —The 529 plan beneficiary and the Roth IRA owner must be the same person. —The rollover cannot exceed the annual Roth IRA contribution limit, including any other IRA contributions. —The rollover is limited by the beneficiary’s earned income. —Contributions and earnings added to the 529 plan within the last five years are not eligible for rollover. Check with your tax preparer before initiating a rollover. While this is a federal law, not all states, including California, may treat the rollover as a qualified distribution. Required minimum distributions Unless your retirement funds are in a Roth IRA, you may need to take your annual RMD from your IRA by year-end. If your 70th birthday was before July 1, 2019, you began taking RMDs at age 70 ½. Under the SECURE 2.0 Act, effective in 2023, the required beginning date was delayed to age 73 for individuals born between 1951 and 1959. Those born in 1960 or after will not be required to take RMDs until age 75. The distribution amount varies annually and is based on an IRS table, the year-end balance of your account, and your age. Missing the deadline to take your annual RMD can result in an IRS penalty of 25 percent of the RMD amount. Inherited IRA RMD An inherited IRA is created when a person inherits an IRA after the original owner’s death. This can occur upon the death of a spouse or when a child inherits a parent’s IRA. Rules for inherited IRAs vary by beneficiary type and can be complex. The following guidelines do not apply to eligible designated beneficiaries, such as a surviving spouse, a minor child, a disabled or chronically ill individual, or someone less than 10 years younger than the account holder. For the non-spouse designated beneficiaries, the distribution clock starts the year after the original owner’s death. The inherited IRA must be fully depleted within ten years. If any balance remains after that period, the IRS imposes a 50 percent excise tax on the remaining amount. When IRA owner dies before beginning: If the IRA owner dies before the required beginning date and the 10-year rule applies, no annual distribution is required until the 10th year. The entire balance must be distributed by December 31 of the year that includes the 10th anniversary of the owner’s death. For example, if the owner died in 2025, the must fully distribute the IRA by December 31, 2035. When IRA owner dies after beginning date: If the original IRA owner passed away after beginning RMDs, the beneficiary must transfer the account to an inherited IRA in their name and must fully withdraw the balance by the end of year 10. A key difference in this scenario is that the beneficiary must take RMDs in years 1 through 9, with the remaining assets withdrawn by the end of the 10-year period. It is strongly recommended to speak with a CPA or financial advisor to confirm which distribution rules are applicable to you. Teri Parker is a certified financial planner and vice president for the Riverside office of CAPTRUST Financial Advisors. She has practiced financial planning and investment management since 2000. Contact her via email at [email protected]. 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