5 Simple 401(k) Moves to Make Before the Year Ends

The final weeks of the year are your last chance to claim a real bonus: the full employer match in your 401(k). Think of it like a free raise. Your company is essentially putting cash into your retirement account for you, and you only get the full amount if you contribute enough to trigger it. This isn't just a small perk; it's money you didn't have to earn yourself.

The deadline is clear: Dec. 31, 2025. If you haven't already, now is the time to check how much you need to contribute to get the entire match. The formula is usually simple-your company might match 50 cents or a dollar for every dollar you put in, up to a certain percentage of your pay. Figure out that target and see how much you've already saved this year. If you're close, you might still be able to adjust your contributions for the remaining paychecks to claim the rest.

For those 73 or older, this date is critical for another reason. It's also the deadline for taking your required minimum distribution (RMD) from a traditional 401(k) for 2025. Missing this could trigger a hefty penalty. So, for many, the end of the year is a double-check: ensure you've claimed your free money match and, if applicable, taken the required withdrawal.

The bottom line is straightforward. You're only allowed to make 2025 contributions until the calendar turns. If you wait, you'll miss out on that free cash for the year. It's a simple move with a powerful payoff, both for your current balance and for the compounding growth it can enjoy for decades to come.

Check Your Plan's Health (Fees and Options)

Your 401(k) is supposed to make you money. But if you're not paying attention, it can quietly work against you. The end of the year is a natural time to check the plan's health, because it gives you a clean slate to start 2026 with a clear view of what's working and what isn't.

One silent thief is high fees. Think of a fund's expense ratio as a tax on your savings. It's a percentage of your assets that the fund charges you every year just to manage them. While you might not see this fee on your paycheck, it chips away at your returns year after year. Ideally, you want to keep this under 1% of your assets. If you're paying more than that, you're handing over a significant chunk of potential growth to the fund manager. Over decades, that adds up to tens of thousands of dollars in lost compounding.

Poor investment choices are another risk. If you're in a fund that's consistently lagging its benchmark, or if your entire portfolio is stuck in risky stocks when you're nearing retirement, that's a red flag. The goal is to match your investments to your timeline and risk tolerance. A simple review can help you spot if your asset allocation is still on track or if it needs rebalancing.

The bottom line is that your 401(k) is a long-term game. You don't need to micromanage it daily, but you do need to check in regularly. Use this year-end moment to look at your fees, your fund performance, and your beneficiary designations. It's a few minutes of work that can protect your savings from invisible drains and set you up for a stronger start next year.

Update Your Legacy (Beneficiaries)

Your 401(k) is a legacy. It's the result of years of saving and investing, and you have a right to decide exactly who gets it. Yet, many people leave this decision to chance, which can lead to family disputes and unexpected tax bills. The end of the year is a perfect time to review and update your beneficiary designations-a simple act that protects your family's future.

The setup is straightforward. When you open a 401(k), you name a beneficiary, typically a spouse or child. That person is legally entitled to the account's assets when you pass away. But life changes. Marriages end, children grow up, and new family members arrive. If you don't update your paperwork, your savings could go to someone you no longer want to benefit, or worse, to a default arrangement like your estate, which may trigger probate and additional taxes.

This is not just about sentiment. It's about ensuring your hard-earned money goes exactly where you intend. A clear, updated beneficiary designation can prevent a messy legal battle among relatives. It also helps your loved ones avoid the complications and delays that come with an estate settlement. In short, it's a responsible step to safeguard your family's financial security.

The bottom line is that this review takes minutes but has lasting consequences. Use this year-end moment to check your current designations. Make sure they still reflect your wishes. If you're unsure, contact your plan administrator. It's a small task that provides a big peace of mind, knowing your legacy is in the right hands.

Choose Your Tax Strategy (Traditional vs. Roth)

The biggest decision you'll make about your 401(k) isn't just how much to save, but when you want to pay the tax bill. This is the fundamental trade-off between a traditional 401(k) and a Roth 401(k). Think of it as choosing between paying your taxes now or paying them later.

With a traditional 401(k), you get a tax break today. The money you contribute comes out of your paycheck before income taxes are calculated, which lowers your taxable income for the year. That's like getting a discount on your current tax bill. But the catch is that when you eventually withdraw that money in retirement, you'll pay ordinary income tax on it. It's a promise to pay later.

On the flip side, a Roth 401(k) works the opposite way. You pay taxes on your contributions in the year you earn them, just like you do with your regular paycheck. But the magic happens in retirement. If you meet the rules, your qualified withdrawals are typically completely tax-free. You've already paid the tax, so the money grows and comes out clean.

The key is to align this choice with your expected future tax bracket. If you're in a high tax bracket now and expect to be in a lower one when you retire, the traditional 401(k) likely makes more sense. You're getting a bigger tax break now when you're paying more tax, and you'll pay less later. But if you expect to be in the same or a higher tax bracket in retirement, the Roth is often the better deal. You're paying taxes on the money now at a lower rate, and you'll never pay them again on that growth.

This isn't just a paperwork detail; it's a core part of your retirement income plan. The tax strategy you pick will directly shape how much cash you have to spend in your golden years. So, take a moment to think about your long-term financial picture. It's a simple choice with a powerful, lasting impact on your retirement security.

Maximize Your 2026 Savings (The New Limits)

The clock is ticking on 2025, but the real opportunity for a savings boost is just ahead. The IRS has already set the stage for 2026, and the numbers are a clear signal to increase your retirement contributions. Think of it as a raise in your savings capacity, a built-in chance to sock away more cash before the year even begins.

The new annual contribution limit for 401(k)s is now $24,500, up from $23,500 in 2025. That's an extra $1,000 you can funnel into your retirement account each year. For those 50 and older, the catch-up contribution limit has also increased to $8,000, up from $7,500. This means the total potential contribution for older savers jumps to $32,500 annually.

This isn't just a small adjustment. It's a tangible opportunity to accelerate your retirement savings. If you've been maxing out your 401(k) in previous years, you can now contribute an additional $1,000 in 2026. For those approaching retirement, the higher catch-up limit offers a powerful final push. The key is to act before the year starts. Most plans allow you to make contributions through the end of the year, so you have time to adjust your payroll deductions for 2026 to take full advantage of these new limits.

The bottom line is simple: the rules have changed, and the new limits are set. Use this year-end moment to look ahead. Calculate how much more you could save in 2026, and adjust your plan accordingly. It's a straightforward move that directly increases your retirement nest egg, giving you more cash in the register for your future.