Start the Clock Reminders for Individuals

From Bob Jennings at TaxSpeaker. Check out TaxSpeaker at taxspeaker.com

1.  The 529 plan. Open a plan now for your kids, yourself, heck even your next-door neighbors! You don’t need thousands of dollars-a hundred or two will “start the clock” Why is this important? The Secure Act 2.0 has setup a new rule allowing, after 15 years the beneficiary to roll $35,000 out of the 529 to a Roth IRA. Why is this important? You can use a 529 for college, but you can use a Roth for anything!. Details in our “What’s New” chapter. Where do you get a 529? Check to see if your state has an approved provider (to get any state credits or deductions), or go to Vanguard or Fidelity or similar mutual funds.

2. Open a Roth IRA. Whenever a younger American gets their first job, they qualify to open a Roth IRA because they now have earned income. We started our own for our son when he was 12 and had his first earned income. This is important because 1 of the features required to make a Roth IRA tax-free is to have it be in existence for 5 years. Again, you don’t need thousands of dollars-a few hundred will open one, and the same mutual fund companies can set one up for your child.

3.Put in a few new energy efficient windows, or furnace or A/C by the end of the year-there is still a soon-to-expire (12/31/25) up to 30% credit for what you spend, and it applies to solar, back-up batteries and doors too. That way you get the full credit before it expires.

4. If you have a high-deductible health insurance plan, or incurred a big medical bill this year load up on other medical costs since this might be a rare opportunity to actually have enough medical expenses to deduct. Use your credit card if needed-it is treated as having been paid this year. Costs to consider? Braces, dental exams, glasses, contacts, prescriptions, medical exams, lab tests, etc.

5. Pay 2026 charitable contributions in 2025 before the new charitable deduction floor kicks in on 1/1/2026.