As 2025 draws to a close, now is the perfect time to review your retirement planning strategy and prepare for the new 2026 retirement contribution limits. The IRS has announced increased limits for 401(k)s, IRAs, and HSAs, while year-end planning opportunities like tax-loss harvesting, Roth conversions, and Required Minimum Distributions require attention before December 31st. This comprehensive guide covers everything you need to know to maximize your retirement savings and minimize your tax burden.
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As we head into the final month of 2025, we want to highlight a few important changes for 2026 and reminders that may affect your retirement planning.
2026 Retirement Contribution Limits
The IRS has recently announced higher contribution limits to retirement accounts for 2026. If you plan on making the maximum contributions to these accounts, this is a good time to make adjustments that can be effective starting in January.
401(k), 403(b), and most 457 Plans
Employee Deferral Limit: $24,500
Age 50+ Catch-Up: Additional $8,000 (Total Limit of $32,500)
Ages 60-63 Catch-Up (if Available in Your Plan): Up to $11,250
Traditional and Roth IRAs
Contribution Limit: $7,500
Age 50+ Catch-Up: Additional $1,100 (Total Limit of $8,600)
Health Savings Accounts (HSAs)
For Self-Only Coverage: $4,400
For Family Coverage: $8,750
Age 55+ Catch-Up: Additional $1,000
Required Minimum Distributions (RMDs)
In general, if you turned (or are over) age 73 this year, you may need to take an RMD. If you are required to take an RMD for 2025 and have not yet done so, please let us know as soon as possible so we can make sure it gets completed prior to December 31. For your accounts we are managing, we already know what needs to be done and in most cases it’s already completed. However, if you have an outside retirement account that we are not aware of, please let us know as soon as possible. If you are charitably inclined, this could be a good opportunity to do a Qualified Charitable Distribution (QCD).
Roth Conversion Opportunities
This is a good time of year to evaluate your income for the year. Please let us know if you have any losses for the year that we would not already know about, as this may be a nice opportunity to make Roth conversions.
Tax Loss Harvesting
With the markets as they have been this year, it may be difficult to find many losses to harvest. However, it’s still not a bad idea to take a look at whether you have any positions at a loss as it may be a good time to offset some gains.
Donating Appreciated Securities
In a similar vein, with the markets as they have been this year, for those who are charitably inclined, this could be a good time to make donations of appreciated securities. If this is a new concept for you, please reach out to us as it is generally more advantageous from a tax perspective to do this rather than donate cash.
Beneficiary Designation Review
It’s never a bad idea to double-check the beneficiary designations on your retirement accounts and insurance policies to make sure they match your desires. Quick reminder: beneficiary designations trump your estate plan – so if you have recently updated your estate plan, you should confirm that your beneficiary designations are updated as well.
Upcoming Changes or Cash Needs in Your Life
Please keep us updated if there are any new or upcoming changes in your life. For example, please let us know if you are planning a big purchase, a house project, or have any other cash need so we can adjust as necessary.
We hope you have a great and warm holiday season, and we look forward to working with you in 2026 and beyond!
Other articles you may be interested in: Finding the Best Order for Funding Retirement, Top 10 Personal Finance Best Practices, or
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Visit ballastplan.com, call 859.226.0625, or e-mail info@ballastplan.com.
About Ballast
Ballast, an employee-owned financial planning and investment management firm based in Lexington, KY, specializes in providing tailored services to high-income earners, high-net-worth clients, and individuals/businesses with complex financial situations. Our team of fiduciaries proactively anticipates and solves your needs by taking the time to understand your goals, passions, and what truly matters to you and your legacy. Ballast is built for financial security by financial experts. You work hard every day. Let us take on some of the work for you.
Disclosure
Ballast, Inc. is a registered investment adviser with the SEC. Registration with the SEC does not indicate that the adviser has achieved a particular level of skill or ability, nor is it an endorsement by the SEC. All investment strategies have the potential for profit and loss. Ballast, Inc. is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Any specific strategy or market/economic commentary may or may not be appropriate for your individual situation, may not have discussed all material implications of implementing said strategy, and may be reliant on data provided by outside resources. Before implementing any strategy or investment decision discussed in a Ballast commentary, please consult with the appropriate professionals to confirm the thoroughness of the strategy presented and its appropriateness for your individual situation.