As the holidays approach, my daughter Kate has already sent me her “Go Wish List” for Christmas — and I’m reminded that this season has a way of filling up fast. Between family gatherings, holiday travel, and maybe sneaking in one more slice of pie than we should, it’s easy for December to come and go in a blur. But before the calendar flips to a new year, it’s worth taking one more look at something far less festive—but incredibly rewarding: your employee benefits.
For those in the final stretch of their careers, these last few working years offer some of the best opportunities to shore up your retirement plan. Think of this as your “final lap tune-up” before crossing the retirement finish line. The small adjustments you make now could have a meaningful impact for decades to come.
Let’s explore how to make the most of your benefits before year-end—and why a strategy called the Mega Backdoor Roth might just be your secret weapon for long-term tax-free growth.
1. Max Out Your Retirement Plan Contributions
If you’re still working, your employer’s retirement plan (like a 401(k) or 403(b)) is one of the most powerful wealth-building tools you have. For 2025, you can contribute up to $23,000 if you’re under 50, or $30,500 if you’re 50 or older.
If you haven’t hit that limit yet, now’s the time to check your payroll settings. Even increasing your contribution by a few percentage points for the last couple of pay periods can make a difference. Remember, every dollar you put away today grows tax-deferred—and potentially tax-free later if you plan smartly.
2. Don’t Leave Free Money on the Table
If your employer offers a match, make sure you’re contributing at least enough to capture the full match. That’s an instant 100% return on your money—something even the best investors can’t promise. Too often, people overlook this in the busyness of year-end, leaving “free” retirement dollars unclaimed.
3. Review Your Health Savings Account (HSA)
If you have a high-deductible health plan, an HSA is one of the few accounts that offers a triple tax benefit: contributions are tax-deductible, growth is tax-deferred, and withdrawals for qualified medical expenses are tax-free.
Even if you don’t use the funds now, HSAs can double as a stealth retirement account for future healthcare costs—something that’s almost certain to rise as we age.
4. Consider the “Mega Backdoor Roth”
This one sounds complicated, but it’s one of the most powerful tools available to higher-income earners who want to maximize tax-free income in retirement.
Here’s how it works in simple terms:
- Many 401(k) plans allow you to make after-tax contributions beyond the standard annual limit.
- Those contributions (up to a combined total of $69,000 for 2024, including your regular contributions and employer match) can then be rolled into a Roth IRA—either immediately or after you leave the company.
- Once inside the Roth, that money grows tax-free for life, and withdrawals in retirement are tax-free too.
Think of it as a “backdoor” route into the Roth world—a way to move more money into a bucket where Uncle Sam never gets another slice. Not all plans allow this, so it’s worth checking with your HR department or giving me a shout to discuss further.
5. Revisit Your Flexible Spending Accounts (FSA)
Unlike HSAs, FSAs typically don’t roll over. That means if you have funds sitting unused, you might need to spend them before year-end. Whether it’s new glasses, prescriptions, or a few overdue doctor visits, make sure those funds work for you—not against you by expiring.
6. Evaluate Insurance and Other Benefits
Year-end is also a great time to review life insurance, disability coverage, and other employee benefits. As you get closer to retirement, these may need to be adjusted—or replaced entirely with private policies or retirement-specific coverage.
7. Get Strategic About Taxes
If you’ve had a strong year financially, consider using charitable giving strategies such as a Donor-Advised Fund (DAF) to offset income. If you’re already retired but doing consulting work or part-time income, Qualified Charitable Distributions (QCDs) from an IRA can also help reduce your taxable income while supporting causes you care about.
The Bottom Line: Small Adjustments, Big Impact
Think of these end-of-year benefit reviews like tuning up a well-loved car before a long road trip. You’re not reinventing the engine—you’re making sure it’s running efficiently, smoothly, and ready for the journey ahead.
And if you’re in your final working years, every decision matters a little more. Because once you cross that finish line into retirement, your income sources shift, your tax picture changes, and your opportunities to take advantage of employer benefits disappear.
Thoughtful year-end planning can play an important role in building a more tax-efficient retirement strategy.
