Everything the Year Built Toward

What is due by December 31?

This month is different from the rest. There's nothing new to learn — it's the month where all the decisions get done.

Distributions. Conversions. Loss harvesting. Charitable transfers. Gifts. All of it has the same deadline, and it doesn't move.

December 31 is the IRS's deadline. It is not your custodian's. Anything submitted in the last two weeks of December can fail to settle in time, and there is no fixing it afterward. Work to a mid-December deadline and treat the rest as a buffer.

Here's the order to work it, because the order genuinely matters.

First: the charitable transfer, before anything else leaves the IRA

If you're 70½ or older and you give to charity, a qualified charitable distribution moves money straight from your IRA to a charity with no tax at all. Not a deduction — an exclusion. It never appears in your income, which means it also doesn't push up the figure Medicare uses or drag more Social Security into the tax base.

For 2026 you can move up to $111,000 per person. Each spouse has their own limit and their own IRA — one can't use the other's.

Now the sequencing rule that costs people real money, and almost nobody knows it:

The first dollar out of your IRA in a calendar year counts toward your required distribution. So if you took a withdrawal in March and try to make a QCD in December, that March withdrawal has already satisfied part of your requirement — and it cannot be reclassified after the fact.

If you're doing a QCD, do it before you take anything else out of that IRA. If you've already taken money out this year, the QCD still excludes income above your required amount — but you've lost the ability to have it satisfy the requirement itself.

Two more rules worth holding onto. It has to go directly from the custodian to the charity — a withdrawal you then donate is not a QCD, and nothing on your paperwork will show the difference. And donor-advised funds and private foundations don't qualify.

Second: the required distribution

If you're 73 or older, you have to take it, and it has to be out by December 31.

The exception is your very first one, which can be delayed to April 1 of the following year — but doing that means two distributions land in one tax year, which frequently costs more than it saves.

The penalty for missing it is 25% of the shortfall, reduced to 10% if you correct it promptly. That's better than the old 50%, and still worth avoiding entirely.

A QCD counts toward satisfying the requirement, up to the amount transferred. If your requirement is $30,000 and you make a $20,000 QCD, the remaining $10,000 still has to come out and it's taxable.

And the requirement has to be fully satisfied before you convert anything. A required distribution cannot be converted to a Roth. It has to come out first.

Third: the conversion

If August produced a number, this is when it happens.

Three things to get right:

Pay the tax from a taxable account. Never withhold it from the conversion. Money withheld never reaches the Roth — it's a distribution that goes to the IRS, so you convert less than you decided to and lose the tax-free growth on it permanently.

Recheck the number against where the year actually landed. August projected. November knows. If income came in higher than planned, the conversion that made sense in August may need trimming.

It cannot be undone. Recharacterizing a conversion ended in 2018. Get it right the first time, with room to spare on the calendar.

Fourth: harvesting, in both directions

Losses. If you hold something in a taxable account worth less than you paid, selling realizes the loss. Losses offset gains first, then up to $3,000 of ordinary income, and anything beyond that carries forward indefinitely.

The trap is the wash sale rule: buy the same or a substantially identical security within 30 days before or after the sale, and the loss is disallowed. Two things people miss — it applies across your accounts, including your IRA, where the loss is permanently lost rather than deferred. And it applies to your spouse's accounts too.

Gains. If your income is low enough to leave room in the 0% capital gains band, realizing gains costs nothing. Sell, pay no tax, buy it straight back — there's no wash sale rule on gains. Your basis resets higher.

August sized the room. This is when it gets used, and unused room doesn't carry forward.

Fifth: charitable giving beyond the IRA

Appreciated stock beats cash. Donate a holding you've owned more than a year and you avoid the capital gain entirely, and if you itemize you deduct the full market value. Giving cash and keeping the stock is strictly worse.

A donor-advised fund lets you take the deduction this year and decide on the recipients later — useful in a high-income year, and useful for bunching several years of giving into one so that itemizing beats the standard deduction.

Note that a donor-advised fund does not qualify for a QCD. Those are separate tools with separate rules.

Sixth: gifting

The annual exclusion is $19,000 per recipient for 2026 — the same as last year. Give up to that to any number of people, with no gift tax, no filing, and no effect on the lifetime exemption. A married couple can effectively give $38,000 per recipient.

It does not carry forward. Use it by December 31 or it's gone.

Seventh: the withholding true-up

July checked whether you're on track. This is where it gets fixed.

If you're short of the safe harbor, take a distribution and withhold heavily from it. Remember why this works: withholding is treated as if it were paid evenly across the entire year, no matter when it happens. A December withholding cures shortfalls dating back to April. An estimated payment doesn't — it's credited when made.

Same money. Completely different result.

One trap specific to December

If you're buying into a mutual fund in a taxable account late in the year, check its distribution date first.

Funds distribute capital gains in December, and if you buy just before the distribution you receive a taxable payout on money you only just invested — you're paying tax on gains you never participated in. Wait until after the distribution date.

The same applies in reverse: funds you already hold will distribute in December whether you sold anything or not, and that income lands on this year's return.

What November is for

Get the list on one page. Amounts, deadlines, and a box to tick when each one is confirmed done — not initiated. Done.

Then work it in order: charitable transfer first, required distribution second, conversion third, harvesting, giving, gifting, withholding.

And submit everything by mid-December. The deadline is the IRS's. The bottleneck is your custodian's.