On the last day of every month, my wife and I sit down and fill out our whiteboard calendar that is attached to our fridge. We have a great color-coded system for her events, my events, together events, and miscellaneous.
When we sat down on Sunday afternoon to update the calendar, we had the same two reflections: “Where did this year go?” and “December is full!”
In the busyness of everyday life, it is easier than ever for a year to fly by, leading to important details slipping through the cracks.
In our newest blog series for the holiday season in 2025, we will be laying the groundwork to help you make a list of high priority items to consider before we step into 2026. This blog focuses on tools available for high-income professionals while you are still working and earning. We will continue this series with lists for both those approaching or in retirement, and business owners.
Let’s get started!
Contributing to an Employer-Sponsored Retirement Plan:
For our clients that are high income professionals in sensitive tax situations, employer-sponsored retirement plans are one of the most effective ways to save for retirement.
Whether that plan takes the form of a 401(k), 403(b), SIMPLE IRA, SEP IRA, or another, the focus is on helping to prioritize long-term savings, while optimizing income tax situations along the way.
For 2025, an employee under the age of 50 can contribute up to $23,500 in a 401(k) plan, which increases to $31,000 for an individual in their 50s and $34,750 from ages 60-63. Most plans offer both Pre-Tax and Roth contribution options, and many employers offer a match on employee contributions.
Your advisor at Master’s can work with you to determine your optimal contribution rate and whether to do Pre-Tax, Roth, or a mix of both.
Plan Ahead for 2025 Tax Filing
While it feels like the distant future today, the 2025 tax filing deadline is just 4 short months away, and many planning opportunities will go away once we hit January 1st.
December is a great time to evaluate your tax picture for 2025 and determine if you can take any action before the end of the year to save on your future tax bill.
For example, if you typically itemize your deductions, the state and local tax (SALT) deduction rules have been changed with the passing of the One Big Beautiful Bill Act. The maximum deduction has been increased from $10,000 to $40,000 for state and local taxes paid. However, this deduction begins to phase out at $500,000 (married filing jointly status) of Modified Adjusted Gross Income (MAGI).
Another law change impacting itemized deductions comes in the form of the charitable giving floor. Starting in 2026, the deduction is only available for gifts to charity that exceed 0.5% of your Adjusted Gross Income, slightly decreasing the deduction available per dollar of charity that you give. To counter this law change, you may consider gifting more in 2025 to maximize the impact on your tax liability.
If you would like more information on changes from the OBBBA act, specific to a high-income household, check out our blog on the topic.
Roth Conversions
One final item to consider before the end of this year is a Roth conversion.
A Roth conversion happens by taking money in a traditional IRA (or 401(k) or other eligible retirement plan), paying your current ordinary income tax rate, and moving the money into a Roth IRA (or 401(k)) account. This strategy could be advantageous if your income was lower and you expect to land in a lower tax bracket than usual.
It involves voluntarily paying income tax on the funds converted, which can be beneficial in lower than usual income tax years. Then, the money in a Roth IRA will grow tax-free for both you and your future beneficiaries, unlike the tax-deferred nature of a traditional IRA/401(k).
An important consideration is that this strategy does not make sense if you are currently in a higher tax bracket than you expect to be in at retirement. One final thing to note: many employer-sponsored retirement plans do not support Roth conversions, so check with your plan document to know if this is available to you.
Double Check Your List
As you can see, this checklist is (probably) a little more complicated than your Christmas shopping list. This blog laid out three different tools you can use, but your list should likely be significantly longer and continuously evolving. We at Master’s would love to walk alongside you as plan for 2025, 2026, and beyond, so please contact us with any questions you may have.
