Planning
5 Ways to Wrap Up 2025 Financially
November 14, 2025
As the year draws to a close, it’s an ideal time to review strategies that may help you end 2025 with intention and financial clarity. Whether you’re looking to support loved ones, optimize your charitable giving, or manage your estate, the following five actions offer practical recommendations to make the most of upcoming opportunities and recent legislative changes. These insights are intended to help you maximize benefits and plan with confidence.
1. Gifting
For 2025, the annual gift tax exclusion allows you to gift up to $19,000 per individual ($38,000 per married couple) to as many individuals as you’d like without reducing your federal lifetime tax exemption.
For tax year 2026, the annual exclusion for gifts remains at $19,000.
However, the annual exclusion for gifts to a spouse who is not a citizen of the United States increases to $194,000 for calendar year 2026, up $4,000 from calendar year 2025. If both spouses are U.S. citizens, there are no transfer limits between each other.
If you’re planning for your children’s education expenses, consider “superfunding” their 529 college savings account. This involves making a large contribution to the account using 5-year gift tax averaging, which allows you to gift up to $95,000 ($19,000 x 5) per individual in a single year.
Benefit: This strategy can help you take advantage of early compounding and remove assets from your estate.
2. Charitable Giving
The “One Big Beautiful Bill” (OBBBA) has made significant changes to the tax benefits of charitable contributions starting in 2026.
For Itemizers: For the first time, OBBBA is setting a floor on the deductibility of charitable contributions equal to 0.5% of Adjusted Gross Income (AGI) starting in 2026. Only the excess of this new floor will be eligible for the charitable deduction.
For Non-Itemizers: OBBBA permanently restores the charitable deduction for non-itemizers starting in 2026. The new maximum charitable deduction is $1,000 for single-filers and $2,000 for joint-filers. This deduction is not subject to the 0.5% AGI floor, which applies to itemizers (Schedule A). Notably, qualifying charitable contributions must be made in cash and cannot be made to a donor-advised fund or to a Section 509(a)(3) “supporting organization”.
Action: If you know you are planning to donate in the next few years or do annual donations, it may be beneficial to bunch your donations in 2025 before the floor is in effect. Consult with your LourdMurray team and CPA to see how you could benefit from this.
3. 401(k) Catch-up Contributions
Beginning in 2025, SECURE 2.0 raised the catch-up limit for participants aged 60–63 to the greater of $10,000 or 150% of the regular catch-up limit.
Here’s how the 2025 limits compare:
| Age | Catch-up Limit | 402(g) Limit | Total Contributions |
|---|---|---|---|
| 50-59 | $7,500 | — | $31,000 |
| 60-63 | $11,250 | $23,500 | $34,750 |
| 64+ | $7,500 | — | $31,000 |
Beginning in 2026, SECURE 2.0 requires high earners, a participant who earned more than $145,000 in FICA wages, to elect catch-up contributions on a Roth basis. This means that if you have been making pre-tax catch-up contributions and plan on continuing to do so, these contributions will now be after-tax, and your income may look higher than what you are accustomed to.
Action: Talk about developing a retirement contribution plan with your LourdMurray team and CPA. If you are between ages 60-63, this may be a great way to bolster your 401(k) for the next few years.
4. Roth Conversions & Backdoor Roth IRA Contributions
The Roth IRA can be one of the most useful tools in your retirement tool kit. The main advantages of a Roth IRA are that the gains on your investments and your withdrawals after age 59 ½ are tax free.
Unfortunately, there are some income limits that may exclude you from being able to make a direct contribution. The income limits for 2025 are $165,000 for filing single and $246,000 for married filing jointly.
A Roth Conversion involves converting all Traditional IRA assets into Roth IRA assets. This conversion would generate taxable income in the year of said conversion. If you’re in a lower than usual tax bracket this year or have recently retired, now may be an ideal time to complete a Roth Conversion.
The “Backdoor Roth IRA Contribution” strategy builds upon the Roth conversion strategy, by immediately converting your traditional IRA contributions into your Roth IRA every year. This is particularly useful for people who are neither able to deduct traditional IRA contributions nor directly contribute to their Roth IRA.
Action: If you are impacted by these income restrictions or have assets in a Traditional IRA, we’re happy to help you determine whether this strategy aligns with your individual financial goals and circumstances.
5. Inherited IRA’s 10-Year Rule
If you inherited an IRA after 2019, you are most likely subject to the 10-year rule.
The 10-year rule simply requires the entire balance of the participant’s account to be distributed by the end of the 10th year following the owner’s death.
There are exceptions for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person or a person not more than ten years younger than the employee or IRA account owner.
If you are currently taking required minimum distributions (RMDs), odds are this minimum amount will not fully deplete the account within the 10 years. This can lead to a large taxable income year in the final year when you need to pull out all the funds since all distributions count as taxable income.
Action: Work with your LourdMurray team and CPA to determine what is the best distribution schedule for your situation. If you have a low-income year within the 10-year time frame, it may make sense to plan for a larger distribution in the low-income year to take advantage of the lower tax bracket.
In navigating complex financial decisions, thoughtful planning and understanding of your unique circumstances are key. By collaborating with your trusted advisors, you can make well-informed choices that support your financial well-being. If you have questions or wish to explore your options further, reaching out may provide valuable clarity for your next steps.
Source: Internal Revenue Service (IRS)
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