As we approach year-end, it’s time to think about our annual financial planning checklist, including optimizing charitable giving; contributing to retirement plans, FSAs, and HSAs; taking RMDs or QCDs; and making annual gifts under the $19,000 gift tax exclusion for 2026.
This year adds a few extra considerations due to some recent rule changes.
Employer Retirement Plans
Historically, any worker aged 50 or older could make extra “catch-up” contributions to a traditional 401(k), 403(b), or governmental 457(b) plan on a pre-tax basis, lowering their current-year taxable income. In 2026, high-income employees can no longer make pre-tax catch-up contributions. Instead, they must designate their catch-up contributions as after-tax Roth contributions. The rule triggers if an employee’s prior-year wages from their current employer exceed $150,000. The IRS measures this by using what’s on your 2025 W-2, Box 3, Social Security wages.
| Age Bracket | Standard Limit (Can be Pre-Tax) | Catch-Up Limit (Must be Roth) | Total Max Contribution |
|---|---|---|---|
| Ages 50 – 59 | $24,500 | $8,000 | $32,500 |
| Ages 60 – 63 (Super Catch-Up) | $24,500 | $11,250 | $35,750 |
Fun fact: there’s a job-hopper loophole. Because the $150,000 rule relies strictly on the prior year’s W-2 from the current employer, anyone who changes jobs mid-year or at the beginning of the year technically has $0 in prior-year wages with the new plan sponsor. That means you can make pre-tax catch-up contributions at the new company for that first calendar year, even if you made millions at your previous company.
Made in America Car Loan Interest Deduction
Under the One Big Beautiful Bill Act, taxpayers can now deduct up to $10,000 annually in personal car loan interest. The car needs to have been purchased new, weigh under 14,000 pounds, and must have been assembled in the United States. Historically, borrowing money to buy a depreciating asset would be considered poor financial planning, but under the current rules, the government is helping subsidize auto debt. There are income thresholds and the deduction completely phases out with Modified Adjusted Gross Income of $150,000 for single filers and $250,000 for those Married Filing Jointly. This is an above-the-line deduction, meaning that you can take it even if you take the standard deduction.
Grandparent 529 Plans and FAFSA
Historically, grandparent-owned 529 plans were a financial aid trap. While the assets inside the account didn’t have to be listed on a student’s Free Application for Federal Student Aid (FAFSA), any distributions used to pay for tuition were treated as untaxed income to the student, which could slash financial aid eligibility by up to 50%.
A recent overhaul of the financial aid system eliminated these penalties by changing the rules around reporting. Now 529 plans owned by a grandparent, aunt, uncle, or anyone other than the dependent student or their parents do not need to be reported on the FAFSA. The FAFSA no longer asks or tracks untaxed financial support from extended family members. Grandparents can now pay tuition directly from their 529 plans without hurting the student’s aid eligibility for the following year.
As with everything, there is a catch. While the Federal government cleared the path for grandparents, many private schools use the College Scholarship Service Profile (CSS Profile) rather than just FAFSA. CSS Profile schools will still likely ask about 529 plans owned by non-custodial parents and relatives and will factor them into financial aid math.
New strategies are always worth considering. And nothing says “it’s the holiday season” quite like looking at old W-2s. The tax code may be temporary, but year-end planning is forever. As always, please feel free to reach out to talk through your situation.
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Disclaimer: Armbruster Capital Management’s views as portrayed in this post are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Investing involves risks, and the value of your investment will fluctuate over time, and you may gain or lose money. Past performance is no guarantee of future results.