Effective year-end financial planning could look something like this: a Roth conversion, a gift to a grandchild, and help with a loved one's tuition payment. The costs or benefits of each don't always appear in the year you act.
At Advocate Wealth Solutions, our planning runs through The PILOT Process™, five layers examined in order on every plan: Portfolio Positioning, Income & Tax Strategy, Longevity & Life Event Stress Testing, Ownership & Control, and Transfer of Risk. This article details where these three year-end moves land within our process.
This article is educational information about how the rules work, not a prediction of any household's result.
Consider How Roth Conversions May Affect Future Medicare Premiums
A Roth conversion made in 2026 can raise a Medicare beneficiary's premiums two years later, in 2028, because premiums are based on income reported two tax years prior.
A Roth conversion moves money from a traditional IRA to a Roth IRA. The pre-tax portion is taxable income in the year of the conversion, which raises that year's modified adjusted gross income (MAGI).
For people on Medicare, or close to it, that increase matters a couple of years later. Those with higher income may pay an income-related monthly adjustment amount, or IRMAA, on top of Part B and prescription drug premiums. The government sets this amount using the tax return from two years back, meaning 2026 premiums generally reflect 2024 income. For 2026, the adjustment starts above $109,000 of MAGI for individual filers and above $218,000 for joint filers, with brackets tiered above those thresholds.
So a 2026 conversion would generally show up in premiums two years later. This is a timing effect, not a permanent one. None of this makes a conversion a good or bad idea on its own. It just means that IRMAA and tax implications should be taken into account, and we do that within our Income & Tax Strategy layer.
What Happens to Medicare Premiums When Income Drops?
When income falls because of retirement or the death of a spouse, the government allows a request for a new IRMAA determination based on current, lower income, rather than waiting two years for the tax return to catch up.
This is the same lookback mechanism working in reverse. Life-changing events can trigger an immediate reassessment instead of forcing a household to carry an outdated, higher premium. Testing a plan against events like these (a core part of our Longevity & Life Event Stress Testing layer) means knowing the request exists before you need it, not discovering it after the fact.
How Much Can You Gift Tax-Free in 2026?
For 2026, the federal annual gift tax exclusion is $19,000 per recipient. Because it applies separately to each person, a parent can give $19,000 to each child or grandchild individually, generally without needing to report anything.
A gift to one person above $19,000 generally requires filing Form 709, the federal gift tax return, by April 15 of the following year. In most cases, no tax is actually due at that point. The amount over the exclusion counts against the lifetime basic exclusion amount, which is $15,000,000 for 2026 under current federal law. Gift tax only applies after a person's lifetime taxable gifts exceed that amount.
The clock that matters here is the calendar year: a gift intended for 2026 needs to be complete in 2026, and a check that hasn't cleared by year end can raise questions about whether the gift was actually made in time. This timing consideration sits within our Ownership & Control layer, where titling, transfers, and documentation all need to agree with one another.
Can You Pay Tuition or Medical Bills Without Using Your Gift Exclusion?
Yes. Tuition paid directly to a qualifying school, and medical bills paid directly to a provider, aren't treated as taxable gifts under federal law at all.
These direct payments don't use the annual exclusion, carry no dollar cap, and don't require the student or patient to be a relative. A grandparent who pays tuition straight to the college can still give that same grandchild a separate gift up to the $19,000 annual exclusion, effectively two benefits from two different provisions.
A few details matter for accuracy: reimbursing the student or parent after they've already paid doesn't qualify for this treatment. Tuition means tuition specifically, not books, room, or board. And medical amounts that are later reimbursed by insurance aren't covered under this exception.
Why Do These Three Money Moves Belong Together?
A Roth conversion, a change in income, and a year-end gift each touch a different layer of the same financial plan (Income & Tax Strategy, Longevity & Life Event Stress Testing, and Ownership & Control, respectively), which is exactly why they're worth lining up before December 31 rather than evaluating in isolation.
This is the reasoning behind our PILOT Process™: Portfolio Positioning, Income & Tax Strategy, Longevity & Life Event Stress Testing, Ownership & Control, and Transfer of Risk, run in a fixed order because each layer's answer becomes the next layer's input. A tax decision made without a stress test behind it, or a gift made without checking titling and documentation, is how coordinated plans quietly go wrong.
These three moves touch three different layers of the same plan, which is why they're worth lining up before December 31. If that's worth a conversation, the place to start is our Clarity Map Session: 30 minutes, no cost, no obligation. It covers where your income comes from, what the IRS is owed and when, and whether your documents and titling agree, and you keep the map either way.
Educational information only, not legal, tax, or investment advice, and not a guarantee of any particular outcome. Tax and Medicare rules change and every household is different; talk with your own tax professional and attorney about your situation. Advocate Wealth Solutions is a registered investment adviser.
Published October 14, 2026. Tax law, contribution limits and thresholds change, so read any figure here as of that date. None of it is advice about your own situation. Advocate Wealth Solutions is a fee-based planning firm in Dublin, Ohio, and a Clarity Map Session is where questions about your own accounts get answered.
