The new year often brings a renewed focus on finances: how your savings are working, how your plan is structured, and how prepared you feel for what’s ahead. We at Wilkinson Wealth Management believe that even after the celebration ends, there’s still time to reset and strengthen your financial plan for 2026.
This guide walks you through each key area of your plan so you can begin the new year grounded, organized, and financially well positioned.
Retirement
Maximize Your Retirement Savings
Many employers offer retirement plans like 401(k)s, 403(b)s, and 457s, which allow you to contribute up to $24,500 for 2026, $32,500 if over age 50 or 64+, and up to $35,750 (due to the super catch-up allowance) if you’re age 60–63 in 2026.
These contributions are automatically deducted from your paycheck and won’t show up as part of your annual income, so the more you can maximize your contributions during the year, the less taxable income you will have. With this strategy, you can defer taxes until your retirement years when you could potentially be in a lower tax bracket.
Keep in mind that the SECURE Act 2.0 and the One Big Beautiful Bill Act (OBBBA) will continue to increase the contribution limit each year after 2026. Starting in 2026, all catch-up contributions will no longer be tax-deductible; all catch-up contributions must therefore be made on an after-tax basis to a Roth component of the retirement plan.
Contribute to an IRA
Contributing to a traditional IRA is another strategy to reduce your AGI if your income is within certain limits. By contributing pre-tax funds, you can effectively reduce your current-year tax liability, but you will owe tax on both the contributions and the account growth when you withdraw the funds in retirement.
Alternatively, you can contribute to a Roth IRA, where taxes are paid up front but distributions are tax-free at age 59 ½ as long as the first contribution was made at least five tax years ago. The 2025 limit for IRAs is $7,000 with additional $1,000 catch-up contributions for individuals over the age of 50. Contributions can be made until April 15th, 2026, for the 2025 tax year, so there’s still time to utilize this strategy. If you’ve already maximized your 2025 contributions, start contributing for the 2026 tax year. The 2026 contribution limit is $7,500 with an additional $1,100 for individuals age 50 and over.
Understand Your RMDs
The rules around required minimum distributions (RMDs) were changed thanks to the SECURE Act 2.0. If you turn 73 after December 31, 2025, you must take your first RMD by April 1, 2027. If you turn 74 after December 31, 2025, and you haven’t taken your first RMD, you must do so by April 1, 2026, and then take your second RMD by December 31, 2026.
If you are subject to RMDs in 2025, the sooner you understand the rules around your distribution, the better. Though we are barely into the new year, you don’t want to be caught off guard come December 31st. Failure to take any RMD could result in you facing a 25% penalty on missed distributions.
If you don’t need your RMD money to live on, consider donating the funds to a worthy cause, which could also lessen your tax burden for the year, via a qualified charitable distribution(QCD). To calculate your RMD, use one of the IRS worksheets.
Cash Flow
Assess Your Emergency Fund
Now is the time to ensure that you have enough money set aside in your emergency fund or create a plan to build this up over the next year. An adequate emergency fund should cover 3-6 months of necessary living expenses, including mortgage or rent, utilities, groceries, transportation, etc.
With all stock market uncertainty and potential for the economy to slow in 2026, many experts have suggested maintaining a larger emergency fund, closer to 6-8 months of expenses. If you’re single, or your household only has one source of income, consider saving on the higher end of this scale to feel confident you’re covered in the event of a job loss or reduction in income.
However much you save, be sure this money is held in a highly liquid account. It needs to be readily available and easily accessible, but it should also be in an account that offers a competitive interest rate so you don’t lose out on potential growth.
The SECURE Act 2.0 has made saving for emergencies a bit easier. Participants are allowed to contribute up to $2,500 annually to an “emergency fund” within the 401(k) plan. These contributions may be accessed before retirement and will not be subject to the 10% early withdrawal fee.
Create and Maintain a Budget
The word “budget” seems to have a negative connotation; many people think that if you budget, you’re broke. Budgeting actually gives you permission to spend and is a simple way to keep track of your expenses and be aware of how much you’re actually saving each month. If one of your goals for the new year is to improve your cash flow and make better financial decisions, creating and maintaining a budget is a great place to start.
Risk Management
Contribute to a Health Savings Account
If you’re enrolled in a high-deductible health plan, consider contributing to a health savings account (HSA) in 2026. HSAs offer triple tax savings. Contributions are tax-deductible, earnings grow tax-free, and withdrawals are tax-free if used to pay for medical expenses.
The 2026 IRS contribution limits for HSAs are $4,400 for individuals and $8,750 for families ($4,300 for individuals and $8,550 for families in 2025). If you are 55 or older, you may also be able to make catch-up contributions of $1,000 per year.
Review Your Workplace Benefits
The beginning of the year is a great time to review your workplace benefits and update your coverage levels if need be. If you had a major change to your family structure in 2025, like a birth, marriage, or divorce, now’s the time to update your 2026 health, dental, and vision insurances. Many employers also offer group life insurance, which can be a great addition to any private coverages you may have. Be aware that health insurance premiums are expected to rise substantially in 2026 (up to 20%), so consider premiums versus deductibles when choosing your coverage costs for the year.
Contribute to Your Flexible Spending Account
Your employer may also offer a healthcare flexible spending account (FSA), which allows you to set aside pre-tax money for qualified out-of-pocket medical expenses. For 2026, you can contribute up to $3,400, up $100 from 2025.
Unlike HSAs, FSAs do not require that you participate in a high-deductible health plan, but they are not as versatile either. For instance, HSAs allow you to carry over any unused funds to the next plan year, whereas FSAs only allow you to carry over up to $680. Generally speaking, if you do not have access to an HSA, then contributing to an FSA is likely a good idea.
Revisit Your Plans and Policies
The new year is also a great time to assess your insurance needs, review your coverages, and update designated beneficiaries to reflect your current financial situation. For example, if you paid off debt, you may not need as much life insurance coverage since your family’s liabilities have decreased. You might also want to evaluate your need for other types of insurance, such as long-term care or disability insurance.
Taxes
Donate to Charity
Donating to charity doesn’t have to wait until the holiday season. In fact, charitable gifting is a great tax strategy to incorporate throughout the year.
Annual gifts to qualified charitable organizations may be deemed an eligible itemized deduction and can be a great way to give back at the end of the year while also minimizing your tax bill. With the higher standard deduction, confirm that your total itemized deductions for the year 2026 exceed $16,100 for an individual filer, and $32,200 for married filing jointly ($15,750 and $23,625 for 2025). If your deductions fall below this amount, consider doing several years’ worth of giving in one year.
Seniors will benefit from special extra standard deductions. Those over age 65 receive a $2,000 extra deduction for 2025, increasing to $2,050 in 2026. Those married filing jointly receive a $1,600 each deduction in 2025 ($3,200 combined) and $1,650 each ($3,300 combined) for 2026. In addition, those 65 and over may also qualify (based on income limitations) for a temporary extra deduction of $6,000, but only from 2025 through 2028. If you might fall into these qualifications, it’s important to understand how these dedications may apply to your tax situation and plan accordingly.
Donor-advised funds (DAFs) are another option that allow you to contribute a lump sum all at once and then distribute those funds to various charities over several years. With this strategy, you can itemize deductions when you make the initial contribution and then take the standard deduction in the following years, allowing you to make the most of your donation tax-wise.
Invest in a College Savings Plan
If you have children or grandchildren in your life, contributing to a 529 savings plan is an excellent way to jump-start their college savings in the new year.
This type of educational savings plan was created so families can receive tax benefits for saving toward qualified higher-education expenses. After-tax money is invested in a 529 plan, where it grows tax-free. When the money is later taken out for qualified expenses, there are no federal taxes due.
For 2025, you can give up to $19,000 (or $38,000 if gift-splitting with a spouse) per 529 account gift-tax-free. The numbers for 2026 remain at $19,000 per contributor. There’s also a special election that allows you to give 5 years’ worth of contributions as a lump sum, meaning you could give up to $95,000 (or $190,000 if gift-splitting) entirely gift-tax-free!
Remaining 529 balances can be rolled into a Roth IRA for the account beneficiary, so you won’t have to worry about losing the funds if your child chooses not to go to college or doesn’t use the full account amount. Keep in mind that the account must be at least 15 years old and the maximum lifetime rollover limit is $35,000. Contributions made in the last 5 years will not be eligible for rollover.
Consider a Roth Conversion
Roth IRAs are an attractive savings vehicle for many reasons, including no required minimum distributions (RMDs), tax-free withdrawals after age 59½, and the ability to pass wealth tax-free to your heirs. Unfortunately, Roth IRAs have income restrictions, and you may not be able to open an account outright if you are above certain limits.
To get around this threshold, consider a Roth conversion. Using this strategy, you will pay tax on money contributed to a traditional IRA, thereby converting it into a Roth. If you believe you will earn less income in 2026, or your traditional IRA balance has taken a hit due to recent market volatility, a Roth conversion may be a great opportunity for your specific situation. Converting to a Roth also allows your money to grow tax-free for as long as you’d like.
Consider Tax-Loss Harvesting
Tax-loss harvesting involves selling investments at a loss in order to offset the gains in your portfolio. By realizing a capital loss, you are able to counterbalance the taxes owed on capital gains. The investments that are sold are usually replaced with similar securities in order to maintain the desired asset allocation and expected return.
Given the continued market volatility of 2025, this can be a great way to make the most out of a losing situation by using an investment loss to offset your tax liability. Even though the deadline for this to count toward the 2025 tax year may have passed, there will likely be ample opportunity to revisit this strategy in 2026. Talk with your advisor about potentially harvesting your losses and if it makes sense for you.
Investments
Review Your Asset Allocation & Invest With Impact
The beginning of the year is also a great time to review your asset allocation strategy and incorporate ESG and impact investing if desired. Given the dramatic market volatility and historic levels of inflation over the last year, it’s crucial to evaluate your investments and verify that your portfolio is properly diversified in 2026. It should also be tailored to your specific risk tolerance level, so you earn enough returns to keep up with inflation but you’re not overexposing yourself to risk.
If you are interested in using your funds to support environmental, social, or governmental issues (ESG), you can also consider impact investing as a way to earn returns while also promoting change on causes you care about.
Estate Planning
Review Beneficiary Designations
If you had any major life events happen in 2025, like a birth of a child, marriage, divorce, or a death in the family, make sure you review your beneficiary designations for 2026. There are several assets, including retirement accounts, bank accounts, and life insurance policies, that are distributed based on beneficiary designation and not the terms of your will. If you have an updated will but an outdated beneficiary listed on one of these accounts, there is a chance your assets will not pass according to your wishes.
Review Your Estate Documents
Similarly, it’s important to review your estate planning documents, including your last will and testament, any powers of attorney, living wills, and/or trust documents. The new year is always a good time to take another look at these documents or start drafting them if you don’t already have them in place.
Make the Most of the Annual Gift Tax Exclusion
If you’re looking to reduce your taxable estate in 2025, consider making gifts up to the annual exclusion amount. Individuals can give to each recipient (and to an unlimited number of recipients) up to $19,000 and married couples can give up to $38,000 without triggering a gift tax. Not only that, but the beneficiary of your gift will not have to report it as income. This is a great way to spread your wealth amongst family and friends.
Here to Support Your Finances in the New Year
If reviewing your finances for the new year feels like a lot to manage, remember that you don’t have to sort through it alone. The team at Wilkinson Wealth Management helps clients bring clarity and structure to their financial lives with thoughtful planning and seasoned guidance. With more than 25 years of experience, our focus is on strengthening financial strategies so clients can move forward with confidence and enjoy the life their wealth is meant to support.
If you’d like a fresh perspective this new year, reach out to us at 434-202-2521 or use our Contact Us page to schedule an appointment.
About Mitchell
Mitchell Moore is a financial planner with Wilkinson Wealth Management, a financial services firm of CFPs in Charlottesville, Virginia, providing customized financial planning and investment strategies with a personal approach. After completing a BS in Business Financial Planning from Virginia Tech, as well as a financial services internship, Mitchell found himself ready for the chance to jump-start his career. He applied for a position at Wilkinson and moved to Charlottesville after accepting the offer. He is very excited to grow and learn alongside our team.
Mitchell enjoys spending time exploring the local scene. He is the youngest of three boys and a tinkerer like his father. When he isn’t working on his current project restoring an old boat, he loves getting outdoors to fish and hike. He’s also an avid VT football fan and likes to watch their games.
This article was prepared for Mitchell Moore’s use.