Charitable Planning  Solutions 

Written by Lee Stoerzinger, CFP® 

The foundation of our country was built on charitable planning and it is an important part of our culture. Many organizations exist to serve the various needs in our society, and our governments provide various opportunities to citizens to give in a tax preferred manner. We wish to highlight two solutions which could provide significant benefits to all involved as it relates to this area. 

IRA Distributions Direct to Charity 

Several years ago, a new law was put into effect which allows people age 70 ½ or older to make distributions from their IRA directly to a charity. This allows the investor to avoid full income taxes on the amount withdrawn, and the organization to recognize the gift. (One caveat is the contribution must be made out and delivered directly to the charity. Taking the cash and then writing a personal check does not qualify.) This becomes powerful because many people do not need their required minimum distributions to live on, and it provides a great resource.

Stock to Donor Advised Fund

Many people have stock which has done well over the years and has become highly appreciated. For those who are charitably inclined, there is a great solution available. An investor could take the amount of stock that is appropriate for their planning purposes and donate directly to something called a Donor Advised Fund. In doing so, the investor avoids paying taxes on the entire gain of the appreciated stock. In addition, they also receive the charitable deduction in the year the gift is made at current market value (subject to income limits). The best part is that by using a Donor Advised Fund, the funds go into an account for later use and invested in a manner the person chooses. When the need for a gift to charity arises, the owner sends in a request and the funds are sent directly to the charity. This can be used for any qualified charity, including splitting between different organizations, for as long as the funds are in the account. 

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.