Expert Contributor | By Terald Shaw, CLTC, BFA, Thrivent Financial
These days, there seems to be a never-ending stream of calls, emails, and letters asking for donations. With all those requests, it really can put you in a bind. You want to help, but it can be overwhelming to decide who or what to support and how much to give.
The solution? Reconsider your approach to charitable giving. If you build it into your financial plan, you benefit in several ways. You have the satisfaction of knowing you’ve thoughtfully chosen who and what you want to help. You have a plan in place that makes generosity happen. You may be able to give more, and you might even gain some tax advantages.
Develop a Strategy: Some popular strategies are listed below
- Donor Advised Funds
- Gift Appreciated Assets
- Leave assets to charity in your will
- Set up a charitable gift annuity
- Establish a charitable trust
Make a Qualified Charitable Distribution (QCD)
If you are 70½ or older, you can use assets from your individual retirement account to create a fund that supports your chosen charities through the qualified charitable distribution (QCD) process. This can be a giving option for retirees as the QCD will count towards any required minimum distribution (RMD). However, the QCD will not provide any charitable contribution tax deduction but it is a non-taxable distribution. You can donate up to $100,000 per year but keep in mind that QCDs only apply from traditional IRAs (not 401(k)s) or other qualified employer plans, and the charity must be qualified by the IRS.
The Secure Act 2.0 now also makes it possible to give a one-time annual gift of up to $50,000:
- Gifts can go to a charitable remainder unitrust (CRUT), charitable remainder annuity trust (CRAT) or charitable gift annuity (CGA).
- For the gift to count, it must come from your IRA by Dec. 31.
Work with your financial advisor and tax professional to see if a QCD is right for you.
Terald Shaw, CLTC®, BFA™ | Financial Advisor | 407-305-2591 | connect.thrivent.com/terald-shaw
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