What Tax Questions Should Retirees and Pre-Retirees Ask Before the End of 2026?

Retirees and pre-retirees may want to review their taxable income, retirement-account withdrawals, Roth conversion opportunities, investment gains and losses, Social Security taxation, Medicare implications and future required minimum distributions before the end of the year.

Why before December 31? Because tax preparation and tax planning are two very different things.

By the time a tax return is prepared next spring, it can explain what happened in 2026. But some of the decisions that could have changed that picture may no longer be available. For those approaching retirement or already retired, that raises an important question:

Is there something you should be looking at now, while there is still time to make a decision?

Here are six questions worth asking before 2026 comes to a close.

 

Do I know how much taxable income I will have this year?

Estimating taxable income before December 31 can help retirees and pre-retirees understand where they may fall within the tax brackets and whether certain year-end planning opportunities are worth exploring.

Retirement can make income more complicated, not less. Instead of receiving most income from a paycheck, money may now be coming from several places:

• Social Security
• Pensions
• Traditional IRAs and 401(k)s
• Roth accounts
• Brokerage accounts
• Interest and dividends
• Part-time or consulting work

And those sources aren't necessarily taxed the same way. That is why one of the first questions in year-end planning should be:

Where is my taxable income actually going to land this year?

Once that is understood, other questions become easier to evaluate.

• Do you still have room within your current tax bracket?
• Would taking additional income this year change the picture?
• Could recognizing income today make sense compared with leaving more money in tax-deferred accounts for later?

If no one has projected your 2026 income yet, you may be making retirement tax decisions without seeing the full picture.

 

Should I take money from, or convert money in, my retirement accounts before year-end?

For retirees and pre-retirees with traditional IRAs or 401(k)s, year-end can be an important time to evaluate whether taking a distribution or completing a Roth conversion fits into the broader retirement tax strategy.

For many people in this age group, age 59 ½ is an important milestone. After reaching 59 ½, distributions from a traditional IRA are generally no longer subject to the additional 10% early-distribution tax, although taxable distributions are still generally included in income.

That doesn't mean money should automatically be withdrawn. It means there may be more flexibility to decide when income is recognized. That becomes particularly important when a large portion of retirement savings is sitting in tax-deferred accounts.

At some point, required minimum distributions, or RMDs, may begin. Under current rules, the applicable RMD age is generally 73 for people born from 1951 through 1959 and 75 for those born in 1960 or later.

That creates an important planning window for some retirees:

What happens between retirement and the time required distributions (RMDs) begin?

A Roth conversion is one strategy that may be evaluated during those years. Previously untaxed amounts converted from a traditional retirement account to Roth are generally included in income in the year of the conversion.

So the question isn't simply:

“Should I do a Roth conversion?”

A better question may be:

“Would recognizing some taxable income this year fit into my longer-term retirement tax strategy?”

And, if so:

“How much?”

 

Could a year-end tax decision affect my Social Security or Medicare?

Yes. For retirees, an increase in taxable income can have consequences beyond the federal income tax bracket, including the taxation of Social Security benefits and, for Medicare beneficiaries, income-related Medicare premiums.

Social Security benefits can become partially taxable depending on other income received during the year. The IRS considers other income together with a portion of Social Security benefits when determining how much of those benefits may be taxable.

That means a retirement-account withdrawal, Roth conversion or investment gain could potentially affect more than one line on a tax return. Medicare adds another consideration.

Medicare's Income-Related Monthly Adjustment Amount, commonly called IRMAA, can increase Part B and prescription-drug premiums for beneficiaries whose modified adjusted gross income exceeds certain thresholds. Social Security generally uses tax-return information from two years earlier when determining IRMAA.

In other words, a tax decision made in one year can potentially show up in Medicare costs later. That is why a decision that appears attractive when viewed only through the lens of today's tax bracket may look different when the rest of the retirement picture is considered. Before making a year-end move, ask:

What else could this decision affect?

 

Have I reviewed the gains and losses in my investments?

Year-end can be a useful time to review taxable investment accounts because realized gains and losses can affect the amount of capital gains tax owed for the year.

Investors often pay close attention to how their portfolio has performed. But there is another question worth asking:

What will that performance mean at tax time?

If investments have been sold at a gain during the year, losses elsewhere in a taxable portfolio may potentially offset some of those realized gains.

Capital losses can generally offset capital gains. If losses exceed gains, up to $3,000 of net capital losses may generally be deducted against other income, with additional unused losses potentially carried forward.

But taxes should not be the only reason to sell an investment. The decision should still make sense within the broader investment strategy, and rules such as the wash-sale rule need to be considered. That makes the better year-end question:

Have my investments been reviewed from both an investment and a tax perspective?

If your investment professional and tax professional are looking at two different pieces of the puzzle, there may be questions worth asking.

 

If I give to charity, have I considered where the gift should come from?

For some retirees age 70 ½ or older, charitable giving directly from an IRA through a Qualified Charitable Distribution, or QCD, may be worth evaluating as part of year-end tax planning.

A QCD is generally a distribution made directly from an eligible IRA to a qualifying charity. The IRA owner must be at least age 70 ½ when the distribution is made. For someone who already plans to support a charity, that creates another question:

Does it make sense to write a check from my bank account, or should I consider another source?

The answer will depend on the individual's age, accounts, charitable goals and overall tax situation. But it is a good example of why retirement tax planning isn't simply about deciding what to do. Sometimes how you do it matters too.

 

Am I planning for this year's tax bill, or for taxes throughout retirement?

This may be the most important question on the list.

Retirement tax planning is not simply about paying the least amount of tax this year. It is about considering how today's decisions may affect taxes and income throughout retirement.

Imagine someone who recently retired and has a significant amount saved in a traditional IRA. Their income may be lower today than it was during their working years. Later, Social Security, pensions and required distributions could all be part of the picture. Should they simply leave the IRA untouched for as long as possible?

Maybe. Or maybe this lower-income period creates an opportunity worth examining.

That is the point of planning. There is no single strategy that is appropriate for every retiree. The opportunity is in knowing which questions to ask before the decision is made for you by time, tax rules or circumstances.

 

Before December 31, Make Sure the Right Questions Have Been Asked

Year-end tax planning is not about making a move simply because the calendar is running out. It is about making sure important decisions have been reviewed before the opportunity to make them has passed.

Do you know where your taxable income is likely to land this year? Have you looked at whether a Roth conversion belongs in your strategy? Could a decision today affect Social Security, Medicare or future required distributions? Are your investment and tax strategies working together?

And perhaps the biggest question:

Is there something you have not looked at yet?

Once 2026 ends, some planning opportunities may no longer be available for the year. That makes now a good time to review the bigger picture and identify any questions that still need answers.

If you are approaching retirement or already retired and want a second look at your strategy, Wood Financial Group offers a complimentary 15-Minute Strategy Call.

It is an opportunity to talk through your retirement picture, identify areas that may deserve a closer look and determine whether there are any questions worth addressing before December 31.

No pressure. No obligation. Just a conversation to help make sure nothing important is being overlooked.