Tax Planning Opportunities Throughout the Year

by Kristin Larson, CFP^®, CPWA^®, Founder & Wealth Advisor

By the time you sit down to prepare your tax return, many of the decisions that shape your tax picture have already been made.

As your career and wealth grow, your tax situation can get more complicated, particularly when you are balancing a demanding career or business with family and other financial priorities.

Here are several areas that may deserve a closer look.

Plan Around Your Compensation

For many executives, salary is only one part of how they are paid. Bonuses, restricted stock units (RSUs), stock options, deferred compensation, and other benefits can each have different tax implications.

For example, you may have a large block of RSUs vesting this year while you are also considering exercising stock options and selling company shares you already own. Before taking action, it helps to understand what else is happening during the same tax year.

If company stock represents a meaningful portion of your wealth, it can help to see how the next several years might look. Option exercises and stock sales can affect your income, investment gains and losses, charitable giving, cash needs, and how much of your wealth remains tied to one company.

Consider Roth Opportunities

High income can limit access to certain retirement savings options, including the ability to contribute directly to a Roth IRA. For 2026, eligibility begins to phase out at modified adjusted gross income between $153,000 and $168,000 for single and head-of-household filers and between $242,000 and $252,000 for married couples filing jointly.

If your income exceeds those limits, there may still be ways to contribute to Roth accounts, including a backdoor Roth and, depending on your employer's plan, a mega-backdoor Roth.

A backdoor Roth generally involves making a nondeductible contribution to a traditional IRA and then converting it to a Roth IRA. If you already have pre-tax money in a traditional IRA, the pro-rata rule can make part of the conversion taxable, but that does not necessarily prevent you from pursuing a backdoor Roth. In some cases, those assets can be moved into your current employer’s 401(k), making a backdoor Roth possible when it might otherwise have been overlooked. At NewSpring, we can help determine whether this approach could work for you and coordinate the necessary steps.

A mega-backdoor Roth may be possible if your 401(k) plan permits after-tax employee contributions and allows those amounts to be converted to a Roth account. In 2026, the regular employee 401(k) contribution limit is $24,500, while the overall defined-contribution limit is $72,000 before applicable catch-up contributions. Employee deferrals, employer contributions, after-tax contributions, and certain other amounts count toward the overall limit, so the amount available for additional after-tax contributions will vary if your plan allows it.

In addition, as of 2026, if you are aged 50 or older and earned more than $150,000 from your employer in 2025, catch-up contributions to that employer's applicable workplace plan generally must be made on a Roth basis.

Consider What You Give

If giving is already part of your financial life, how you give can make a difference.

For example, if you plan to give $25,000 to charity and also own stock that has appreciated significantly, donating the shares directly to a qualified charity or donor-advised fund may allow you to avoid realizing the embedded capital gain while potentially receiving a charitable deduction, subject to applicable tax rules and limitations.

Timing can matter too. If you expect a large bonus or other significant income this year, you might consider whether funding several years of planned charitable giving at once makes sense. Be sure to consider your state of residence as well. Beginning in 2026, Minnesota limits its charitable contribution deduction to contributions exceeding 1% of the taxpayer's contribution base. For Minnesota residents planning a significant gift, that is another reason to think about timing.

Plan for Wealth Transfers

As your wealth grows, tax planning can extend to how assets are transferred to your family and others you care about.

For some women, that may include wealth they expect to inherit from parents or a spouse. A significant inheritance can change your own estate, investment, charitable giving, and tax considerations.

For 2026, the federal estate and gift tax exemption is $15 million per individual. For married couples, federal law allows a surviving spouse to use a deceased spouse's unused exemption when the required portability election is made. State estate tax laws can be different. In Minnesota, for example, the estate tax exemption is $3 million per individual and there is no portability between spouses. If the first spouse dies without using their exemption, the unused amount does not transfer to the surviving spouse.

Trusts and lifetime gifting can play a role, from providing for family members and determining how assets are managed to addressing potential estate taxes.

Whether you are preparing to receive wealth or thinking about how your own wealth will eventually pass to others, addressing these questions early gives you more time to understand your options.

Look Beyond a Single Tax Year

Your income may change considerably from one year to the next. A job change, retirement, business transition, large bonus, or significant stock award can result in higher or lower income years.

For example, a higher-income year with substantial capital gains may be a good time to look for losses elsewhere in your taxable portfolio that could offset some of those gains. During a lower-income year, you might consider a Roth conversion or realize investment gains.

State taxes can affect investment decisions. Minnesota imposes an additional 1% tax on net investment income exceeding $1 million.

If you are planning a significant stock sale or expect a large investment gain, state taxes belong in the conversation before you sell.

This is one reason we like to look several years ahead rather than planning around one tax year at a time.

Bring It All Together

Tax planning should happen throughout the year as you make decisions about your compensation, investments, retirement savings, charitable giving, estate, and career.

Staying ahead of those issues can also take one more financial responsibility off your plate.

At NewSpring Wealth Partners, we make tax planning part of your broader financial plan, working with you and your CPA to identify opportunities and make sure important tax considerations receive attention when they need it.

Key Questions

When should I start tax planning for the year?

Effective tax planning happens throughout the year, particularly before major financial events such as a bonus, stock vesting or option exercise, investment sale, charitable gift, retirement contribution, or business transition. That allows you to make important decisions well in advance of your tax return.

Are there tax opportunities I might be missing because of my income?

Yes. While higher income can prevent you from contributing directly to a Roth IRA and affect the value or availability of certain deductions, you may have other opportunities such as backdoor or mega-backdoor Roth contributions, planning around stock compensation, donating appreciated investments, and considering the timing of financial decisions during higher- or lower-income years.

Do I need to think about estate taxes if I am below the federal exemption?

Yes, as state estate tax exemptions can be much lower than the federal exemption. In Minnesota, for example, the 2026 exemption is $3 million per individual, compared with $15 million federally. Your current wealth, potential inheritance, family circumstances, and plans for transferring assets can also affect when estate planning deserves attention.

---

Sources:
irs.gov
revenue.state.mn.us

Tax laws, limits, and thresholds referenced are for 2026 and are subject to change. Consult your tax and legal professionals regarding your individual circumstances.