Most tax mistakes aren’t dramatic. They don’t come with alarms or bold red flags. They show up quietly, months later, when it’s too late to fix them.
A withholding election that never got updated after a promotion.
A beneficiary designation that doesn’t reflect a divorce or remarriage.
A retirement contribution that stayed flat while limits increased.
That’s why effective tax planning for 2026 starts at the beginning of the year, not when tax forms arrive in the mail.
Review Withholding and Estimated Payments Early
Job changes, promotions, retirement, bonuses, and new income streams can all throw withholding out of balance. When that happens, taxpayers may face underpayment penalties if they haven’t paid enough throughout the year.
The IRS generally requires individuals to pay at least 90% of their current-year tax liability, or 100% (110% for higher earners) of the prior year’s liability, through withholding or estimated payments to avoid penalties.¹ Reviewing this early allows adjustments to be spread across the year instead of scrambling to fix the problem later.
This step is especially important heading into 2026 as Roth requirements for certain catch-up contributions may change after-tax cash flow.
Revisit Beneficiary Designations
Beneficiary designations override wills. That alone makes them some of the most powerful — and most overlooked — estate planning documents.
Life events such as marriage, divorce, births, deaths, and blended families often happen faster than paperwork gets updated. Since the SECURE Act, many non-spouse beneficiaries must distribute inherited retirement accounts within 10 years, accelerating taxable income.² An outdated beneficiary designation can unintentionally shift both control and tax burden to the wrong person.
A simple review of beneficiaries across retirement accounts, insurance policies, and transfer-on-death registrations can prevent significant unintended consequences.
Update Retirement Contributions for New Limits
Contribution limits increased again for 2026:³
- 401(k), 403(b), and 457 plans: $24,500
- Catch-up contributions (age 50+): $8,000
- Super catch-up contributions (ages 60–63): $11,250
Many employees set contributions as fixed dollar amounts rather than percentages. Without an update, they may miss the opportunity to fully fund tax-advantaged savings even though limits increased.
Consider Roth Conversions for Newly Retired Clients
Early retirement often creates a brief planning window. Earned income may drop before Social Security and required minimum distributions begin, potentially placing retirees in lower tax brackets.
Strategic Roth conversions during this period can reduce future RMDs, increase tax diversification, and provide heirs with more flexible assets under the SECURE Act’s distribution rules.⁴
Don’t Overlook Cash Flow Leaks
Recurring subscriptions, unused services, and forgotten automatic payments rarely appear on tax returns, but they erode savings capacity. Early-year reviews often uncover easy opportunities to redirect cash toward retirement, education, or charitable goals.
Bottom line: January planning creates options. April planning limits them.
Early planning creates better options. If you’d like help reviewing your tax strategy as part of a broader financial plan, a OnePoint advisor can help guide the conversation.
Footnotes
- Internal Revenue Service, Publication 505: Tax Withholding and Estimated Tax
https://www.irs.gov/publications/p505 - Joint Committee on Taxation, SECURE Act Summary
https://www.napa-net.org/news/2023/12/joint-tax-releases-bluebook-explanation-secure-20-changes/ - Internal Revenue Service, Retirement Topics – Contribution Limits
https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500 - Internal Revenue Service, Required Minimum Distributions (RMDs)
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
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This communication has been provided for informational purposes only and should not be considered as investment, legal or tax advice or as a recommendation. This material provides general information only. OnePoint BFG does not offer legal or tax advice. Please contact legal counsel or your tax advisor to recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. Circular 230 notice: To ensure compliance with requirements imposed by the IRS, this notice is to inform you that any tax advice included in this communication, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of avoiding any federal tax penalty or promoting, marketing, or recommending to another party any transaction or matter.
OP 25-0477
