Creative Generosity

Creative Generosity

Many of us have a generous heart and want to be charitable, especially when it comes to an organization that we are passionate about. There are many options when it comes to donations, but here are a few options you may not be aware of:

·Qualified Charitable Distributions from your retirement accounts –
you are required to make withdrawals from certain retirement accounts and in some cases, you can direct that the retirement plan make the check payable to a designated non-profit organization instead and can therefore exclude this withdrawal from your taxable income. This was allowed in tax years 2012 and 2013 and may or may not be extended into 2014.

·Appreciated stock –
you may make in-kind gifts of appreciated stocks directly to a charitable organization and typically take a tax deduction of the value of the investment on the date of the gift. If you sell the stock, you would likely be subject to tax on any value over your cost basis (initial investment plus any reinvested taxable
income), however, if you instead donate the investment in-kind, you avoid the tax on the gain and generally receive a tax deduction for the value of the entire investment.

·Beneficiary designation of pre-tax retirement assets –
generally, if your family members receive pre-tax retirement assets, they will be required to take
withdrawals from these accounts either lump-sum, over 5-years, or over an IRS calculated life-expectancy. Your heirs will likely be required to count these distributions as ordinary income and therefore may be subject to increased taxes. If instead, you designate a non-profit organization as beneficiary of some or all of these assets, the tax will typically be avoided on this. You can then leave other assets that have lower tax consequences for beneficiaries to your family members, for example life insurance policies or post-tax investments that receive a step-up in cost basis.

This information is not intended to be a substitute for individualized tax advice. Please consult with your tax professional to discuss how these options may fit into your family’s financial and charitable goals.

Andrea Huebbe, CFP®                Douglas W. Wier, CLU, ChFC
LPL Registered Principal             LPL Branch Manager