September 30, 2026

Five Retirement Tax Moves to Review Before December 31

Share this article...

Five Retirement Tax Moves to Review Before December 31

For retirees, some of the most important tax decisions for 2026 will be made before the tax return is prepared.

That distinction matters.

Tax preparation generally reports decisions that have already happened. Tax planning asks whether something should still happen before December 31.

With several months remaining in 2026, retirees and people approaching retirement have an opportunity to look at the interaction among IRA withdrawals, Roth conversions, required minimum distributions, Social Security and the enhanced federal deduction available to qualifying seniors.

Here are five areas worth reviewing.

1. Decide Whether a Roth Conversion Makes Sense

A Roth conversion moves money from a traditional IRA or certain other tax-deferred retirement accounts into a Roth IRA.

The tradeoff is straightforward: amounts that have not previously been taxed generally become taxable when converted.

In exchange, the money moves into the Roth system, where qualified distributions can eventually be tax-free and Roth IRA owners are not subject to lifetime required minimum distributions.

The IRS confirms that untaxed amounts converted from a traditional IRA to a Roth IRA generally become taxable income for the conversion year.

That makes the size and timing of the conversion critical.

Converting $100,000 because “Roth is better” can be a bad strategy if the additional income pushes the taxpayer into an undesirable tax position.

Instead, a conversion should normally be modeled alongside the taxpayer's other 2026 income.

Questions might include:

How much taxable income do you expect this year?
Will your income rise when RMDs begin?
Will the conversion affect income-based tax benefits?
Do you need the converted money for near-term spending?
What tax rate are you paying now compared with the rate you expect later?

A partial conversion may sometimes make more sense than an all-or-nothing decision.

2. Don't Wait Until Your First RMD to Think About RMDs

Required minimum distributions generally begin at age 73 for affected retirement accounts under current law.

The IRS generally calculates the RMD using the prior December 31 account balance divided by an applicable life-expectancy factor.

But the best time to think about RMDs may be several years before they start.

Why?

Because once mandatory distributions begin, retirees may have less control over the amount of taxable retirement income appearing on their return.

Someone between retirement and RMD age may have a window in which taxable income is temporarily lower.

That period can potentially be used for:

Roth conversions
Planned IRA withdrawals
Capital-gain recognition
Charitable strategies
Other tax-bracket management

The goal is not necessarily to minimize this year's tax bill. Sometimes paying tax intentionally at one rate can reduce exposure to a less favorable rate later.

3. Check the Enhanced Senior Deduction

Taxpayers age 65 or older may qualify for a separate enhanced federal deduction.

For 2026, the deduction can be as much as $6,000 per eligible individual, or $12,000 when both spouses on a qualifying joint return are eligible.

The deduction is available to qualifying taxpayers whether they itemize deductions or claim the standard deduction.

However, it phases out as modified adjusted gross income rises above $75,000 for single taxpayers and $150,000 for joint filers.

That creates an important planning interaction.

A large Roth conversion or other discretionary income transaction may produce a tax benefit in one area while reducing the senior deduction in another.

That does not automatically mean the transaction should be avoided. It means the entire return should be projected before the decision is made.

4. Coordinate Social Security With Retirement Withdrawals

Retirement income rarely comes from a single source.

A household might receive:

Social Security
A pension
Traditional IRA distributions
401(k) distributions
Investment income
Capital gains
Rental income

Those pieces interact.

For example, increasing an IRA distribution can increase taxable income, affect the taxation of Social Security benefits, change the value of deductions tied to income and potentially affect other income-sensitive costs.

This is why retirement tax planning works better as an income strategy than as a series of isolated decisions.

Before deciding how much to withdraw from an IRA, consider what else will appear on the return.

5. Do the Projection Before December

Some planning strategies can be handled when the tax return is prepared.

Others cannot.

A Roth conversion intended for 2026 must actually occur during 2026. And Roth conversions generally cannot simply be undone through recharacterization if the taxpayer later decides the conversion was too large.

Waiting until late December can also create administrative problems when custodians become busy or paperwork is incomplete.

A better approach is to run a tax projection while there is still time to act.

That projection can estimate:

Expected 2026 income
Capital gains and losses
Retirement distributions
Potential Roth conversions
Available deductions
Expected tax brackets
Estimated tax payments and withholding

Retirement planning is not just about how much money you have accumulated. It is also about how efficiently that money can be converted into after-tax retirement income.

If you are retired or approaching retirement, consider reviewing your 2026 income picture with our office before making significant year-end distributions or Roth conversions.

Printable PDF

Have a Question About This Topic?

Track Your Refund

Learning Center

Five Retirement Tax Moves to Review Before December 31

Have a Question About This Topic?

Track Your Refund

Map