Visit CBNLEGACY.org, call 1-800-333-2373 or email [email protected]
Year-End Ideas – Optimizing Charitable Giving
There are three focus areas when deciding on optimizing charitable giving while maximizing tax deductions:
- Appreciated Investments
- Cash
- Retirement Plans
Appreciated Investments
- Gifts of Stock
- Select a highly appreciated stock held for 1-year+ in a brokerage account.
- Donate stock shares by DTC wire transfer.
- Benefits
- Receive an itemized charitable tax deduction at the stock’s market value.
- Avoid the capital gains tax i.e. the tax on profits.
2020 Rules Affecting Charitable Giving
The CARES Act and the SECURE Act created both challenges and opportunities for taxpayers and donors.
Cash Donations
- CARES Act – March 2020 Some changes implemented to encourage charitable giving.
Retirement Plans
- CARES Act – RMDs (Required Minimum Distributions) were waived for 2020.
- SECURE Act – January 2020 Significant retirement plan reform.
- RMD age changed from 70-1/2 to 72.
- IRA QCDs at 70-1/2+ still permitted.
Charitable IRA and QCD Qualified Charitable Distribution
- The QCD is a very smart and tax efficient way for seniors (70-1/2+) to give from traditional IRAs or inherited IRAs. Vehicle used to bypass the tax.
- A Donor Advised Fund is a charitable gift investment fund that pay grants spread out over future periods to qualified charities.
The Bunching Concept Option used with a DAF
- Bunch charitable deductions into one year and itemize deductions.
Legacy Giving – The Best Assets to Give
- SECURE Act
- Eliminated the stretch lifetime IRA distribution benefit to non-spouse beneficiaries.
- Retirement Plans Legacy Option
- Designate appreciated assets (securities & real estate) to children.
- Donate IRA & Qualified retirement plan accounts to charity on a tax-free basis.
- Retirement Plan Legacy Option – CRT (Charitable Remainder Trust)
- Name a CRT as the IRA designated beneficiary for tax-free transfer.
- The CRT creates lifetime income stream for children & Legacy gift to charity.
- Donor Advised Fund Legacy Option
- Name children as DAF successor advisors to continue legacy gifting to charities.
Advisory: Each of these gifting options requires careful planning and coordination. Discuss charitable goals with advisors and share legacy gift plans with family members.
Contact Planned Giving For Assistance When Required
Visit CBNLEGACY.org, call 1-800-333-2373 or email [email protected]
Disclaimer: This communication does not constitute legal, tax, or financial advice, which CBN does not provide. Please consult professional advisors concerning the legal, tax, or financial consequences related to your charitable planning.
