2025 Year-End Portfolio Checklist: Simple Steps to Stay on Track

Over the years, my life has gotten more hectic. I have more family, work, and communal life responsibilities and obligations. I’ve become an avid checklist user to help maintain order. I use them when running my business, family life, vacationing, and even ordering food for dinner. It may seem silly to keep a list to pack for a trip or to order a meal. However, it’s been immensely helpful to save time and ensure that important items don’t fall through the cracks. (Yes, forgetting my daughter’s french fry order is a catastrophic mistake!)

I have found that checklists are also useful for investing. They’re especially great before year-end to stay on top of deadlines and optimize portfolios before entering the new year. Below are some “portfolio checklist” items to consider:

Investment Do’s and Don’ts:

• Do consider rebalancing your portfolio: While many parts of the market went up significantly in 2025, there may be individual investments within your portfolio that increased more modestly or not at all. These market dynamics have driven many investors’ portfolios out of whack. It may make sense to rebalance your portfolio to ensure your allocation is brought back to its appropriate risk tolerance, add proceeds to your losing positions that may appreciate meaningfully in the future, and potentially lock in some losses for tax planning purposes.
• Don’t chase past performance: Every year, there is some investment that did phenomenally well. Unfortunately, it’s impossible to know beforehand which investment that will be. This won’t stop aggressive salesmen from capitalizing on a recent success, touting great returns, and encouraging investors to invest in yesterday’s winners. The market moves in cycles; one year’s winners are oftentimes losers in the following years. The key is to stick with a proper asset allocation and plain-vanilla investments that will allow you to achieve your goals. Chasing past performance will not work out over the long-term.
• Do automate your investment process: You shouldn’t have to manually move money into your investment accounts multiple times a year. I encourage all my clients to automate their deposits into their various accounts. It removes emotions from the investment process and works out well over time.

Don’t Forget RMDs:

• Required Minimum Distributions (RMDs) apply to folks who are 73 or older and to beneficiaries who inherit these accounts. If you are subject to RMDs and don’t take them out before year-end, there will be a penalty.
• Utilize Qualified Charitable Distributions (QCDs): If you don’t need your RMDs to pay your living expenses, you can give them directly to charity with QCDs. Individuals can donate up to $108K, or $216K per married couple, in 2025 from their IRA directly to charity without needing to pay tax on these distributions.

Review Employer Retirement Plans:

• Assess contributions made this year: If you are financially able to, max out your 401(k) or 403(b) annually. In 2025, the contribution limit is $23.5K before any company match. If you’re 50 or older, you can make a catch-up contribution of an additional $7.5K, or $11.25K if you’re 60 to 63.
• Be mindful of next year’s contribution limits:For 2026, the contribution limit will increase to $24.5K. Catch-up contributions for those 50 and older will increase to $8K, with ages 60 to 63 additional limit remaining $11.25K. Be sure to adjust your plan so you take full advantage of these limits next year.
• Determine Roth vs Traditional: The rule of thumb is if you think you may have a high-income year, then a traditional IRA makes more sense. If you anticipate a low-income year, then a Roth IRA makes sense.
• Review your investment lineup and portfolio: This is especially applicable if your firm switched 401(k) providers recently, if you rolled over an old 401(k) into your IRA, or if you are approaching retirement. In any of these scenarios, tweaking your investments may make sense.
• Consolidate old accounts: It rarely makes sense to have retirement accounts scattered at various institutions, especially old employers. It’s better to consolidate old accounts into an IRA to keep your assets organized. If you need help consolidating old accounts, feel free to reach out directly to me.

Consider 529 Contributions:

• A 529 is a tax-advantaged college savings account that may provide immediate tax savings if you live in one of the 30+ states offering a full or partial deduction for your contributions to the home-state 529 plan.
• “Superfunding” 529 accounts: The IRS 709 form 5-year averaging election allows you to spread a tax-free gift to a 529 account over five years for gift tax purposes. A married couple not making any other gifts to the beneficiary during the five-year period can contribute up to $190K to a 529 plan for each child without running into gift tax problems. This avoids using your lifetime gift tax exemption, reduces your taxable estate, and earnings growth is tax-free if used for qualified education expenses.
• Grandparent account owner: If 529 funds are held by grandparents, instead of parents, they are not factored into the FAFSA process. This is a wonderful way for grandparents to save for their grandkids’ higher education without jeopardizing their ability to qualify for financial aid.

Tax Loss Harvesting:

• Strategically generate losses to offset other gains. Using a tax-swap strategy for mutual fund holdings allows you to realize a tax loss while retaining essentially equivalent market exposure. The key is that the funds are not “substantially identical,” which can be accomplished by using different fund companies that track different indices, and may have a slightly different strategy, but still have similar results.
• Donate cash proceeds from the sale of stocks that are at a loss: Investors benefit from recognizing a loss by selling a stock that went down in value. The loss can be used to offset any capital gains for the year, or it can be used to offset up to $3,000 of your ordinary income. That is in addition to the charitable deduction you receive for the cash donation from the proceeds of this sale.

Budget Expense Goals:

• Cash flow management for retirees: It is especially important for retirees to evaluate how much cash they will need in the year ahead and work with their advisor to ensure they are able to meet those needs.
• Mitigating sequence of returns risk: The order of investment returns can significantly impact your portfolio’s overall value and, consequently, a retiree’s ability to maintain their lifestyle later in retirement. Retirees should target a higher cash cushion than is typically recommended for non-retirees to sufficiently mitigate the risk.

Maxing out Health Savings Account (HSA)

• Contribution limits: An HSA allows investors to save and pay for qualified medical expenses with tax-free dollars. In 2025, contribution limits are $4,300 for individuals and $8,550 for family coverage. Folks who are 55 or older can contribute an additional $1,000 per eligible spouse, up to a total, per married couple, of $10,550. While there are limits on the amount you can contribute to your HSA each year, all contributions roll over 100% from year to year without limit.
• Eligibility expands in 2026: The new tax bill expands eligibility to people who use independent insurance through the Affordable Care Act (ACA) and opt for either the Bronze or Catastrophic level of coverage. The open-enrollment period for insurance through the ACA has started and ends January 15^th. The bill also opens HSAs to people with subscription-style primary-care services, in which they pay an annual fee, rather than a per-visit fee, to see their doctor.
• Consider letting funds accumulate: Growth on HSA funds is tax free. Investing aggressively while you are younger, when your medical bills may be lower, can result in a substantial HSA that can be used once you are retired to pay your, likely higher, medical expenses.

Spend remaining FSA funds

• Flexible Spending Accounts (FSAs) allow you to contribute pre-tax money to pay for eligible out-of-pocket health care expenses or eligible dependent care services, such as childcare.
• Use it or lose it: You generally can’t roll the full amount of FSA funds into the next calendar year. To avoid losing any unspent funds, make a plan to use the money before December 31.