Year-End Planning Moves That Actually Matter for High-Earners
More Than a December Checklist
As the year winds down, many high-income professionals and business owners face the same dilemma:
You’ve worked hard, earned well, and paid more than your share in taxes — yet every December you’re left wondering whether you could’ve done more to keep more.
Most year-end planning advice is too generic to move the needle for people with complex financial lives.
Maximizing a 401(k) or giving to charity is just the starting point. The real value comes from integrating your tax, legal, and financial decisions so they all work together — before December 31st, not after.
At Pape Financial, we focus on the year-end moves that actually matter — the ones that can shift thousands, sometimes tens of thousands, from the IRS column to your balance sheet.
1. Optimize Retirement Contributions Across All Accounts
High earners can do far more than max out a 401(k).
W-2 professionals: Check whether your employer plan allows after-tax contributions and in-plan Roth conversions (the “Mega Backdoor Roth”). It’s one of the most efficient ways to build long-term, tax-free wealth — but must be done before year-end.
Business owners: Combine a solo 401(k) with a cash balance plan to meaningfully increase deductions. A 45-year-old could contribute $23,000 employee + $46,000 employer = $69,000 total in 2025 — or over $100,000 with a cash balance plan.
Everyone: Confirm HSA contributions ($8,300 for families in 2025). HSAs are the only triple-tax-free account: deductible in, tax-free growth, and tax-free out.
💡 Pape Insight: You wouldn’t leave a 37% tax deduction sitting on the table. Coordinated retirement savings help you capture it.
2. Turn Charitable Intentions into Strategic Tax Planning
If you’re already giving, do it efficiently.
Most high earners no longer itemize under today’s higher standard deduction. The workaround? Bunch multiple years of donations into one tax year using a Donor-Advised Fund (DAF).
Example:
Donate $50,000 of appreciated ETFs held over a year. You deduct the full fair market value AND avoid capital gains. That’s roughly $18,500 in tax savings for someone in the 37% bracket — without reducing the charity’s impact.
Smart generosity: You decide when to give, the IRS just gives you credit now.
3. Plan for Roth Conversions While the Window Is Open
Converting a portion of pre-tax accounts at today’s lower rates can create decades of tax-free growth. The key: fill your current bracket, don’t spill into the next one.
Partial conversions work well during a:
- down business year
- gap year before RMDs
- temporary income dip
Conversions must be completed by December 31st, not April 15th — so timing matters.
4. Use 529 Plans and Family Gifting Strategically
If education or legacy planning is a goal, 529 plans are one of the cleanest, most flexible tools available.
- Annual exclusion: $19,000 per donor, per recipient in 2025.
- “Superfunding”: Front-load five years at once — $95,000 per child or $190,000 for a couple — removing assets from your taxable estate.
- New perk: Up to $35,000 per beneficiary can eventually be rolled into a Roth IRA, adding flexibility if college costs change.
Good planning passes down more than wealth — it passes down wisdom.
5. Review Tax-Loss Harvesting and Capital Gains Timing
Market volatility creates opportunity.
Harvest losses to offset realized gains and reduce ordinary income (up to $3,000 per year).
Harvest gains strategically during low-income years for favorable long-term capital gains rates.
Loss harvesting can clean up old holdings while maintaining exposure using similar ETFs (beware of wash-sale rules).
Tax-smart investing isn’t about guessing markets — it’s about controlling what you can: cost, behavior, and taxes.
6. Confirm Estimated Payments and Avoid Underpayment Penalties
For high earners, underpayment penalties can quietly add thousands in avoidable cost.
If you’ve had a volatile year — bonuses, capital gains, RSU vesting, or a business sale — now’s the time to review estimated taxes and withholding.
- Make Q4 payments by January 15th
- Adjust December payroll withholding to true up shortfalls
- Have your CPA or advisor run a projection before year-end
The IRS is patient, but not forgiving. Pay the right amount at the right time.
7. Revisit Entity and Compensation Structures
Business owners should use year-end to ensure their entity type and compensation mix are still optimal.
- S-Corp elections can reduce self-employment taxes
- Reasonable salary planning balances payroll, retirement, and the QBI deduction
- Exit planning: Evaluate tools like QSBS exclusion or installment sales early
These require coordination between your CPA, attorney, and advisor — which is exactly what integrated advice delivers.
8. Update Beneficiaries, Estate Docs, and Asset Titling
Even great tax planning can unravel with outdated documents.
Before year-end:
- Review beneficiary designations on retirement and insurance accounts
- Ensure your trust and will reflect current law and family needs
- For high-net-worth families, consider using the $13.99 million lifetime exemption
An estate plan isn’t just for someday — it’s a gift of clarity for your family today.
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9. Rebalance and Rebuild Liquidity
Strong markets can quietly distort your allocation.
- Rebalance portfolios to target weights and manage risk drift
- Build cash reserves for near-term needs using high-yield savings, CDs, or Treasury ladders
With money markets still yielding above 5%, short-term cash now earns a respectable return — and provides flexibility heading into 2026.
Final Thought: Integration Is the Advantage
Year-end planning shouldn’t feel like a scramble — it’s the culmination of an intentional, coordinated process.
For high earners and business owners, the difference between checking boxes and integrating your plan can mean thousands in annual savings and far greater long-term clarity.
At Pape Financial, we bring together legal, tax, and financial perspectives under one fiduciary standard — because when your plan works as one system, every December becomes an opportunity, not a deadline. Pape Financial is a fee-only fiduciary serving Northwest Arkansas locally and clients anywhere in the country virtually. Schedule a call to learn more about what we can do for you.