Written by Grace Stolberg

For most Americans, taxes represent one of the largest household expenses, surpassing what we spend on food, housing, and clothing combined. Whether tax laws shift with a new administration or remain unchanged, one thing is clear: tax planning is no longer optional—it’s essential for long-term financial success. With taxes continuing to eat away at your wealth, strategic planning to minimize that burden could be the key to preserving more of your hard-earned money for the future.

Despite this, research shows that while 92% of IRA millionaires expect tax planning as part of their financial services, only 25% actually receive comprehensive tax guidance. Many financial advisory firms focus on investment management, but a truly holistic plan should go beyond that—incorporating detailed, long-term tax strategies to optimize your wealth.

At O’Keefe Stevens Advisory, we focus on helping you navigate the complexities of taxes, offering not just investment advice but a thorough, tax-efficient roadmap for preserving your wealth over time. As you read on, we’ll explore 10 key strategies that can help you lower your tax liability and retain more of your wealth in the years to come.

10 Effective Year-End Tax Strategies for IRA Millionaires

Now that we’ve outlined the importance of tax planning for high-net worth households, let’s explore the top 10 tax-saving strategies that can make a significant impact for IRA millionaires looking to maximize their wealth and minimize taxes.

1. Create Tax Diversification

A primary goal of tax-efficient retirement planning is to ensure that you have diversified sources of income to draw from in retirement. Many IRA millionaires find that much of their wealth is locked up in tax-deferred accounts like IRAs and 401(k)s. When it’s time to begin taking distributions, the tax burden can be significant.

One strategy is “bucket planning,” which involves shifting investments from pre-tax accounts to taxable or Roth accounts. If you’re still in your earning years, consider dialing back contributions to tax-deferred accounts and focus on building up Roth IRAs or taxable brokerage accounts. This diversification allows you to have more control over the types of accounts you use to generate income in retirement, giving you more flexibility in how you structure your withdrawals to minimize taxes.

2. Consider Roth Conversions for Future Tax Savings

Roth conversions are one of the most effective ways to reduce your lifetime tax liability, particularly if you anticipate being in a higher tax bracket later in life. A Roth IRA allows your funds to grow tax-free, and withdrawals in retirement are not subject to income tax.

The key to Roth conversions is to convert in years when your taxable income is lower. This approach allows you to pay taxes at today’s historically low rates before tax rates potentially rise in the future (as they are scheduled to do after 2025). Depending on your situation, you may be able to convert funds into a Roth IRA without pushing yourself into a higher tax bracket, saving significant amounts of tax dollars over time. A well-planned series of Roth conversions can provide tax-saving benefits not only during your lifetime, but for your children and heirs, long after you’ve passed.

3. Optimize Asset Location for Tax Efficiency

The concept of asset location focuses on placing investments in the most tax-efficient accounts based on their growth potential and income-producing characteristics. For example, tax-deferred accounts like Traditional IRAs or 401(k)s are ideal for holding slower-growing or income-producing assets like dividend-paying stocks, since the taxes on those gains will be deferred until you take distributions.

Faster-growing assets, such as individual stocks or equity-based mutual funds, are better suited for Roth IRAs or taxable accounts. If you hold these investments in taxable accounts, capital gains are taxed at lower rates when sold, and Roth IRAs allow for tax-free growth and withdrawals.

4. Take Advantage of Tax-Loss Harvesting

Tax-loss harvesting is the practice of selling investments that have lost value in order to offset capital gains elsewhere in your portfolio. This strategy can help reduce your taxable income for the year and lower your overall tax liability.

While tax-loss harvesting can be done throughout the year, it’s especially important toward the end of the year when you can assess your portfolio for any capital losses that can offset gains. The ability to use tax-loss harvesting year after year can lead to substantial tax savings over time.

5. Maximize Contributions to Retirement Accounts

The end of the year is a perfect time to ensure you’re making the most of your retirement savings. Take full advantage of the contribution limits for 401(k)s, IRAs, and other retirement accounts. If your employer offers a match, make sure you’re contributing enough to receive the full match, as this is essentially “free” money.

For 2025, the contribution limit for 401(k) accounts is $23,500 for individuals under age 50, with a catch-up contribution of $7,500 for those 50 and older.

6. Consider Backdoor Roth Conversions

For high-income earners who are phased out of making direct Roth IRA contributions, a backdoor Roth IRA conversion is an effective way to contribute to a Roth account. This strategy involves contributing to a Traditional IRA and then immediately converting those funds to a Roth IRA.

Although it’s important to keep in mind that you must pay taxes on any pre-tax contributions or earnings during the conversion process, this strategy allows you to take advantage of the tax-free growth and withdrawals associated with Roth IRAs, even if your income exceeds the Roth IRA contribution limits.

7. Utilize Health Savings Accounts (HSAs)

Often referred to as a “medical IRA” at O’Keefe Stevens, Health Savings Accounts (HSAs) provide unique tax benefits. If you’re enrolled in a high-deductible health plan (HDHP), you can contribute to an HSA and benefit from a triple-tax advantage: contributions are tax-deductible, the money grows tax-deferred, and withdrawals for qualified medical expenses are tax-free.

For 2024, you can contribute up to $8,300 to an HSA if you’re married and filing jointly. If you’re over age 55, you can take advantage of catch-up contributions. The power of compounding in an HSA is significant, particularly if you don’t need to use the funds for medical expenses in the short term, as the money can grow tax-free for future healthcare costs, including long-term care.

8. Engage in Distribution Planning

Another key strategy is distribution planning, which involves managing when and how you take withdrawals from your tax-deferred accounts in retirement. By taking distributions earlier in retirement (when your taxable income is lower) or converting funds to Roth IRAs, you can avoid larger Required Minimum Distributions (RMDs) later on, which may push you into a higher tax bracket.

This type of proactive planning helps you avoid surprises and better structure your income to minimize taxes during retirement. Knowing when and from where you will take income in the future can also help with other financial decisions, such as Social Security claiming strategies and the timing of large expenditures or gifts.

9. Utilize Annual Gift Tax Exclusions for Estate Planning

If you’re looking to reduce your estate tax burden, one strategy is to make use of the annual gift tax exclusion. For 2024, the gift tax exclusion is $18,000 per person, meaning you can gift that amount each year to family members without it counting toward your lifetime estate tax exemption.

This is a powerful way to transfer wealth to heirs while reducing the taxable value of your estate. If you have a significant estate and live in a state with its own estate tax, you might want to start gifting early to avoid crossing the estate tax threshold and paying unnecessary taxes.

10. Leverage Donor-Advised Funds for Charitable Giving

For those with philanthropic goals, donor-advised funds (DAFs) are an excellent tool for charitable giving. A DAF allows you to contribute assets to a charitable fund and receive an immediate tax deduction, while retaining the ability to distribute those funds to charities over time.

One benefit of using a DAF is that you can “batch” your charitable contributions, making larger donations in a single year to maximize your tax deduction. This can be particularly beneficial if you are doing Roth conversions or if you find yourself in a higher tax bracket due to increased income or capital gains.

Looking Ahead: Planning for Inherited IRAs

Recent changes to tax law, especially the SECURE Act of 2019, introduced the 10-year rule for inherited IRAs. This rule requires non-eligible beneficiaries to deplete inherited IRAs within 10 years, which can create a significant tax burden for heirs, particularly if they are in their peak earning years.

Planning for inherited IRAs involves ensuring that your wealth is passed on in the most tax-efficient way possible. Converting tax-deferred accounts into Roth IRAs before passing them on to heirs is one of the best ways to avoid a large tax bill for your beneficiaries.

Final Thoughts

Tax planning is a critical part of your financial strategy, especially as you accumulate wealth in tax-deferred accounts. With careful planning, you can create tax diversification, reduce your lifetime tax liability, and ensure more of your wealth goes to the people you care about, not the IRS. At O’Keefe Stevens Advisory, we specialize in multi-decade tax projections and retirement planning, helping you make proactive decisions that will benefit you and your family for generations to come.

If you’re ready to start your year-end tax planning or explore strategies tailored to your specific financial situation, we invite you to reach out and schedule a discovery call with us. Let us help you navigate the complexities of tax planning, and work with you to develop a strategy that maximizes your wealth and minimizes your taxes.

Disclaimer: Although we obtained information contained in this article from sources we believe to be reliable, we cannot guarantee its accuracy. The opinions expressed in the article are those of O’Keefe Stevens Advisory and may change without notice. The information in this article may become outdated and we have no obligation to update it. The information in this article is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. It is provided for information purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security.

Investment advisory services are offered through O’Keefe Stevens Advisory, Inc., an SEC Registered Investment Advisor.

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