A Wiser Retirement®

311. Smart Charitable Giving Before December 31st

• Wiser Wealth Management • Episode 311

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In this episode of the A Wiser Retirement® Podcast, Shawna Theriault, CFP®, CPA, CDFA®, and William Medcalf, CFP® discuss how year-end is the perfect time to be strategic with charitable giving. They explore smarter ways to give, instead of just writing a check, to reduce your tax burden. 

Related Podcast Episodes: 

  • Ep 307: Unlocking the Power of Trusts: 10 Different Trusts & How to Use Them
  • Ep 180: How does a Charitable Trust work?
  • Ep 190: Year-End Tax Moves: Planning Ahead for a Stress-Free Tax Season with Jordan Sute Norton, CPA

Related Financial Education Videos:

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This podcast was produced by Wiser Wealth Management. Thanks for listening!

Framing Year-End Giving Goals

SPEAKER_01

That's just better than just giving cash out of your cash flow.

SPEAKER_03

Right.

SPEAKER_01

You know, from the IRA, you're you're avoiding that income that you have to take out eventually.

SPEAKER_03

Yep. The dramatic way to put it is a time bomb. I've seen that online. People call it the IRA time bomb, time bomb. RMD time bomb or whatever. Yeah.

SPEAKER_01

Welcome to a wiser retirement podcast. Are you curious about being strategic with charitable giving before year end? I'm senior financial advisor Shauna Therrialt, and today I'm joined by financial advisor William Medcalf. Each week we bring you practical advice on retirement investing and planning for your financial future. Don't forget to subscribe to the podcast wherever you're listening. Let's get started. I think this is the first time you've been on the show with uh your new title, right?

unknown

Yes.

SPEAKER_03

I just realized that so exciting.

SPEAKER_01

Your promotion. Well deserved.

SPEAKER_03

Thank you very much.

SPEAKER_01

Very, very well deserved. Um, we were talking about before the show, because you know, we record these a little bit in advance in November. We just went on break and uh we went to a work trip to DC and then I went to like the personal trip to DC.

SPEAKER_03

And so yeah, Shauna's second home, DC.

SPEAKER_01

Apparently it's becoming that. No, it was so fun because we went there as a group and I was like, this is so amazing. And so during break, I wanted to take my youngest there since she had never been to like really museums, and I don't know, it was just really it was really fun.

SPEAKER_03

Yeah, I hadn't been since I guess I was a little kid, and so going as an adult, I just I felt like I had a new appreciation for it. So I was very glad we got to go and it was great for the team, you know, team building and stuff, you know, getting to know each other better.

Deadlines, Custodians, And Logistics

SPEAKER_01

It it was so fun, like exploring. Like when I went, I know obviously women as a team, we went we went to a couple things, but we didn't get to do much because we were at a conference and going to seminars and all that stuff, yeah. Exactly. But I, you know, going through all the museums and taking in the history, and it was so, so clean. Like I was I felt like it was really, really clean and just safe. And I don't know, yeah. National Guard was everywhere, and I don't know. It was it felt it was good. It was fun. Yeah, it was really absolutely all right. Well, we're getting near year end, so this is airing November 3rd. So we're gonna start talking about year-end planning and things, and you know, this time talking about charitable strategies and and when to give and timing of giving and and how you can give. So um, I guess we can start off by just talking about, you know, we're obviously at November 3rd already. We need to uh be thinking about the deadlines of when we need to get in our charitable giving.

SPEAKER_03

Yeah. So Schwab will release, that's who we custody with. They'll release deadlines for you know, end-of-year requests. Um, but for Wiser, we have, you know, kind of a soft deadline, I guess kind of a range, just like mid-November to December 1st is when for end of interview requests would be the best time to get those in for our client services team to be able to process those before the end of the year. So that's just a little tidbit there. If you're, you know, you hear something in this podcast, then you might want to send a message to your advisor and let us know that that you're that interested in doing this and want to see you make sure that it, you know, is a good fit for you.

SPEAKER_01

Absolutely. No, and it just generally speaking, the the deadline is technically December 31st, but you're spot on. You know, many custodians they have harder deadlines depending on what you're doing. Um, and we say custodians because there's multiple ways to do gifting. We're gonna talk about gifting from retirement accounts, we're gonna talk about, you know, doing some securities. So we're gonna talk about different ways of doing that, maybe doing um, you know, uh a DAF or donor advise fund. So there's several different ways to do it. And that's when you would use a custodian, but you can still just write a check to the charity and do it by 1231. So there's multiple ways to give to a charity. Um, there may be a better way to do it than to just give cash. And so we're gonna talk about that and maybe strategies there to be helpful. But, you know, generally year end is, you know, the best time to do it. And so, you know, just thinking about how does charitable giving fit into the overall financial plan where we're looking at a financial plan. I don't know if you want to expand on that a little bit.

Where Giving Fits In Your Plan

SPEAKER_03

So I would say the first thing is if you're a charitably inclined person, I would say that's when giving for tax reasons fits the best because you get a benefit for doing the deduction or you know, giving charitably. But you know, you are still giving up those resources in order to get that tax deduction. So it may not make sense if you're not, you know, maybe more charitably inclined. That's totally fine. And we have clients that aren't charitably inclined. So, you know, that's kind of the first thing is like if if you're not if that's not something that you want to do, it doesn't may not make sense for you to give to charity just to get a tax deduction.

SPEAKER_01

Yeah. Um it's really funny about that. I I hear this all the time. It's like, well, I want to get the tax deduction. And, you know, but most people do standard deduction now.

SPEAKER_03

Yeah, exactly.

SPEAKER_01

The standard deduction is so high that if they're writing a check to charity, they may not even be getting the deduction and tax benefit of that. That doesn't mean you still can't give it to the charity because you're charitably inclined and you want to do that and you have the resources and you want to, but you you may want to look to see if you're actually getting a deduction for that. So um, you may not be getting a deduction for that.

SPEAKER_03

Exactly.

SPEAKER_01

Yeah. Um, other ways it can fit into like broader financial planning is, you know, you can look at if you're maybe getting a large payout this year from your company, or, you know, you're getting a ton of RSUs or stock options, or, you know, if you had a good year and you're self-employed and you're gonna have all this income coming at you, you know, that's a way to get a tax deduction. Um, you know, so so you can you can look at it from that regard as well. So where it helps you avoid income or take get deductions on your tax return, which we're gonna talk about the strategies of both of that. So, you know, it may be a good fit for you if you're looking to do something like that as well. Of course. Um, you know, so we'll talk about bunching later, but you know, just really getting the overall tax deduction is where, you know, there's some, there's some estate planning that it can fit into. Um, you know, obviously not by year end because we're not going to plan our demise, but you know, it's it's um, you know, when we're talking about how it fits into the overall financial picture or the financial plan, looking at some estate planning as well. Um, if you want to leave something to charity, you know, a lot of times, you know, which we could do a whole show on this, you know, we would like to maybe leave the IRA to charity versus the other assets and give the other assets to, you know, the family because there's less tax implications. So um, you know, uh so charitable giving can fit in, you know, when you pass away, but also when you're alive too.

SPEAKER_03

Yes, that's great.

SPEAKER_01

Um, common mistakes if you wait too long on the timing of, you know, not hitting the deadlines and all of that.

SPEAKER_03

Yeah. So I mean, in order to get them for the tax year that you need the deduction in, obviously you need to actually make the contributions in that tax year. So that's that's a big thing. And that's why we're bringing up the deadlines earlier. So, you know, if if you're doing it yourself, then obviously you want to make that donation before the end of the year. And then obviously if you're going through your advisor or custodian or something like that, then you need to be aware of their deadlines as well.

SPEAKER_01

Yeah, definitely on top of that. So let's go into donor advice funds and how they work, called, you know, acronym is DAF DAF, donor advice fund, and what it is and how it works.

Donor-Advised Funds Explained

SPEAKER_03

Yeah. So this kind of goes to what we were talking about a minute ago. If you have a large payout or some sort of huge income year, this is something that you may want to look at. And essentially what a donor advice fund is, is if you don't have, let's say you don't have a charity picked out, but you know you want to gift a certain amount to charity and you have this large amount, you want to just go ahead and donate it. You can donate it to the donor advice fund without actually selecting a charity at that point. And you can do that later.

SPEAKER_01

You so you get like the deduction today. So, like for example, you know, you're working with your accountant and you find out that all this income has to come out and, you know, I don't know, you're an S-corp and there's gonna be a big, big distribution, or you find out your year-end bonus is gonna be larger, right? Or you're just now looking at the estimates for next year, you know. Um, or maybe you have been looking, but you're waiting to see what's going on. It does give you the benefit of, you know, if you have already one established. So the way that it works is you would work with a custodian. I know Charles Schwab has one, the Schwab Fund for Charitable Giving. Yep. But there's other, there's other means to do it as well. Um, where you set up this account, you control it. So in other words, it can be an investment account, but you know, you move the assets, cash or securities, we'll talk about each to that account. You get the deduction now this tax year, but then it's not, you know, like let's say you want a$50,000 deduction or a$25,000 deduction because that works with your taxes, but you don't necessarily want to give$50,000 to your church or this charity right now. Yep. You don't have to identify it yet. You can just put the money there. It's a tax deduction, and then you can give it to the charity whenever from that account.

SPEAKER_03

Exactly. Yeah, that's a great point because it's not necessarily that you don't want to or it, you know, it gives you the ability to spread it over those, you know, coming years. And so, like you said, if you just want to, you know, give a certain amount to the charity or your church or whatever it is, then you have the option to do that, but claim that tax deduction in that the first year where you give the you know large amount.

SPEAKER_01

Yeah. And I don't think it makes sense if you're like, okay, I'm gonna give 10,000 to my church. So I'm gonna put it 10,000 the donor advise fund and then move it directly from there to the church. That doesn't make sense. It makes sense to do this because, like, let's say you move that 10,000 to the donor advise fund, you get the tax deduction today, and you can actually invest it there. So they have investments in that account. So you could end up giving more than 10,000 to your charity over time, you know, and let it grow and then give it pieces of it and manage it like that. But you know, you only get that one-time tax deduction. Right. Now, if you move cash in there, um what is the limitation? I guess I want to talk about just limitations and deductions in general.

SPEAKER_03

Okay.

SPEAKER_01

So, you know, moving moving cash or you so you can move cash to an account like that, or you can move appreciated securities. Um, however you give to a charity in general, whether it's a donor advised fund or otherwise, you know, there's limitations to how much you can actually deduct. Right. Um, so you know, you have to look at the item itemization, um, itemized deductions, but also your adjusted gross income.

SPEAKER_03

Correct.

SPEAKER_01

You know, so it the limitation is if you give cash to a charity, it's now 60% of your adjusted gross income. Right.

SPEAKER_03

So I guess if you, you know, if you had a hundred just as a easy number, a hundred thousand, then you can only deduct up to sixty thousand in your income.

SPEAKER_01

Right. Exactly. So if your income's really low, and you know, I've seen it before where I've seen it where maybe there's a retiree who is very charitably inclined and maybe doesn't have heirs and they have a large amount of assets and they're giving every year to charity because they are charitably inclined. Right. And maybe their income's like 50,000, but they're giving like a lot, you know, 75. You wouldn't get the benefit of the whole deduction of that. That's an exaggeration. Right.

SPEAKER_03

But it's a good example. Yeah.

Deduction Limits And AGI Rules

SPEAKER_01

Yeah, exactly. And so, but that's they're like, I'm not doing it for tax. I'm doing it because I want to do that. And so they'd be limited to, you know, 60% of that income. Right. Um, when you're giving appreciated securities. And so what we mean by that is, you know, let's say you own shares of a stock, let's say Coca-Cola, because we're in Atlanta. Yep, you know, your cost basis on that stock is maybe 20,000, meaning that's what you bought it for, but it's now worth 30,000. So, you know, it has appreciated like$10,000. You wouldn't sell that stock and then give the cash. You can actually give the stock directly, all or part of it, to a charity and you're avoiding that capital gain. Yep. So what I what we like to do, what William and I do is we look at is a client charitably inclined? Because then we can give appreciated securities and you don't pay tax on that those gains, right? Right. So you can literally gift the shares and turn around and make the cash deposit and rebuy them. Um, you can do it that way too, if you want to stay invested. Exactly. You know, yeah. So if you were gonna give 10,000 to your church in cash, well, give 10,000 from your brokerage account to your church and you know, that way, and then put the cash back in and repurchase it, you know, it kind of resets your cost basis. And now you're giving this appreciated securities to um the charity, they don't pay tax because they're a 501c3 on that. Um, so anyway, with a donor advice fund, you can give cash or appreciated securities, but that limitation, that 60% of adjusted gross income now becomes 30% if it's appreciated securities.

SPEAKER_03

Exactly.

SPEAKER_01

So, you know, it in the same example you gave, that$100,000 would just be 30,000 that you could deduct, you know. Um, which is still a lot.

SPEAKER_03

Yeah, but it's the government, I guess, prefers that you give cash instead of you know getting out of the capital gains tax.

SPEAKER_01

So fair, fair, um, completely. But with a donor advice fund, it's kind of like um, you know, we have some clients that set up private charities, but this is it's kind of like your own little family charity without managing a private charity, but you can put the money in there, it can still be managed, and then you gift out, you know, over time to whatever charity you feel is, you know, appropriate. So um so it's really ideal scenarios, like you said, if you have high income or if you want to spread it out over several years to a charity, it'd be it'd be a good way to do that with a donor advice fund. So that is one with the timing you would want to get with your custodian now, because it's the beginning of November to say, you know, and some custodians may or may not have it. And if you're custodian where your securities are, don't, that's fine. You can still do a donor advice fund in another firm.

SPEAKER_03

Right, exactly.

SPEAKER_01

It doesn't have to be there. Yeah. So um, it just will take time if you're gonna do appreciated securities, because then they have to transfer it from your current custodian to that other custodian. Exactly.

SPEAKER_02

Quick check-in. Have you thought about the legacy you'll leave behind? Download seven steps to leave a financial legacy, a free guide from wiser wealth management to learn more. It's not just about wealth, it's about leaving a lasting impact. Go to wiserinvestor.com forward slash guides to download your free guide today. Now let's jump back into the episode.

SPEAKER_01

Um, so let's get into other ways to give to charities. Uh QCDs, qualified charitable distributions. I know we've we've talked about this, it's it's been around for a while now.

SPEAKER_03

Yeah.

SPEAKER_01

Um, actually for many, many years. But um, do you want to just touch on that?

Gifting Appreciated Securities

SPEAKER_03

Yeah. So a QCD, a qualified charitable distribution, is a good way to gift to charity out of an IRA. And the key benefit there is that it can stand in for your RMD. So, you know, there's stipulations around that. You have to be at least age 70 and a half. Um, but essentially you can give the RMD from your IRA account up to uh a little over$100,000 this year. I believe it's$108,000 this year, um, directly out of your IRA instead of gifting cash. And so I was trying to explain this to my grandma, and I don't think she understands because I think she likes to put the she likes to put the the check and the offering plate at church. So I don't know that it hits differently that way. It does. So I don't know. Anyway, but you know, explaining this to people is is like this is you know just a very it's a more efficient way to give to your church because they still get the same, you know, amount of money that you're you know trying to give, but you get the tax deduction.

SPEAKER_01

Yeah.

SPEAKER_03

So yeah, it's a great way to get money out of your IRA, especially if you are charitably inclined.

SPEAKER_01

Well, and and so it's interesting because when this whole thing started, the RMD age, when that's that's the RMD age, just to be clear, is the year you have, you know, when you have to start taking distributions from your traditional IRA or 401k accounts, right? So, and you can only do this in an IRA, you can't do it in a 401k. So, you know, the the required minimum distribution age was always 70 and a half for years, and then they changed it after the secure act, where it's now it's like 70 and a half over a certain age, and then 73 and 75, ages 73, 75. But this is still a way, so like let's say you're I like to use it in a couple different ways. You know, let's say your RMD age is 73, but your IRA is like huge, and let's say, you know, so you're gonna have to start required minimum distributions anyway. It's in the three years, you know, a few years at age 73. Um, and let's say you're giving to charity and you're not really getting the benefit because you have the standard deduction. Well, you can take, if you're 70 and a half, you can take some money out of your IRA directly from the IRA to the charity. Yeah, right. Not take it and then do it.

SPEAKER_03

That's a key distinction there.

SPEAKER_01

Exactly. And so you don't get to deduct it, but you don't claim the income. So it avoids the income. So you're still gonna get that in that example of 1099 R from the custodian that you took out$10,000 or whatever amount it is, and but you can avoid it, will not be taxable to you because you're gonna know it went to a charity and you're gonna code it that way on your tax return. So you don't get the deduction and avoid the income, but you get to avoid the income. Right. Which could be even better because when you're thinking about things like Irma and you're thinking about, you know, other things that get taxed or looked at with your adjusted gross income, um, it may be better because you're getting you're avoiding it completely instead of it being, you know, it just may be better. Um so that's one way where you can give directly from an IRA. Many custodians, I know when this first came out, you know, it was like they were having to write checks and do direct to the charity. And now a lot of custodians will let you get a checkbook on your IRA so that you can do the smaller things if you want to.

SPEAKER_03

Yeah, no, that's a great point.

SPEAKER_01

Be careful it's going to a charity, though. Yeah. Don't write the grocery store a check. I don't even know you can do that anymore, can you? Yeah, I don't know. I don't even think my kids know what a check is, other than the paycheck they've gotten a couple of times that it wasn't digital. But yeah, um, you know, so uh you have to make sure that it goes, but you can you can write a check to the charity too. If you do like a lot of small ones,$3,000,$2,000, you can do that too. You just make sure you have to keep track of it because it's you're responsible for telling your accountant or coding your tax return that way. Um so it's a hundred thousand per individual. So interestingly, um, you know, it was a hundred thousand. They're indexing it for inflation now. And so it was 105 last year, 108 this year. Right. Um, so even if your required minimum distribution is like 15,000, you can still give more than that. So you can give more than your required minimum distribution um up to that threshold. So that's good. Um, and it avoids and said then you're not, you still don't you don't have that AGI limitation then.

SPEAKER_03

Right.

SPEAKER_01

Because you're just avoiding the income. So if you're writing a check to, or you know, taking it out of your IRA, it's not like you have that cash limitation of the 60% of the 30%, right? Right. Yeah, because you're just avoiding it.

SPEAKER_03

Correct. Yeah.

SPEAKER_01

Um, so that's another way you may want to do that as well.

SPEAKER_03

Yeah. And again, if you're charitably inclined, this makes sense. But you know, if you're looking in your plan over time and you can kind of project out what the tax rates are gonna be in the future on your RMDs, because you know, that's an increasing scale. So as you get older, they're gonna have you take a larger and larger proportion out of your IRA, which means that you're probably gonna creep up in the tax brackets. This is another way that you can kind of view uh avoid the future income, you know, tax at a higher tax rate.

SPEAKER_01

So completely. No, it's good. I think this is something that, you know, looking at it every year, what makes sense for you, you know, because sometimes clients come to us and say, well, I've already given to my church, you know, every month. And it's like, well, okay, let's do this differently, maybe. And I don't want to cause like a financial crunch for the cash flow of the church. So it's like, okay, maybe we look at the beginning of the year or whatever your situation is, you know, maybe we look at giving appreciated securities from a taxable account or doing a QCD or doing a combination thereof. So that way you're satisfying, you know, the maybe you're satisfying that your contribution for the church or whatever charity that you've, you know, said that you would help. Um, but you're also looking at the taxes of that as well. So I think there's a lot to do with both of those strategies that's just better than just giving cash out of your cash flow. Right. Because this is like a double, you know, from the IRA, you're you're avoiding that income that you have to take out eventually.

SPEAKER_03

Yep.

SPEAKER_01

And, you know, then you can dramatic way to put it as a time bomb.

SPEAKER_03

I've seen that online. People call it the IRA time bomb time bomb. RMD time bomb or whatever. Yeah.

Qualified Charitable Distributions From IRAs

SPEAKER_01

I know I feel like they don't think about all the deductions you got before that, though. You know what I mean? It's like, do you really, you know, all of that adds up over time, the deductions that it going in there, the deferring to your 401k, the deferring to your IRA, et cetera.

SPEAKER_03

But um, yeah, that's another podcast right there.

SPEAKER_01

Yeah, the time bomb of that exactly. Um, so those are those are good strategies. And so, you know, maybe doing a combination thereof. Um other smart giving strategies, so bunching deductions.

SPEAKER_03

Yeah, so that can work in conjunction with a donor advice fund. So we've already kind of talked a little bit about this, or at least the the broader concept. But basically, if you know that you're gonna give a certain amount to your church every year, you could, again, if you have a larger income amount, or maybe you just want a tax deduction for that year, you want to be able to itemize for a specific year, you could say, I'm gonna take five years worth of the deductions that I'm gonna give to my church and then bunch them all in one year and basically front load that in order to get a larger tax deduction for one specific year. And you can do that outside of a donor advised fund, um, whether it's and you know, gifting appreciated securities, all of these things can work in conjunction with bunching, but um the the general concept is just taking multiple years' worth of deductions and then putting them into one year.

SPEAKER_01

Absolutely. And like to your point, you may want to do that if your income's gonna be higher or something, or maybe if your charity has asked for certain need, um, or you know, you know, maybe they're have a special project. So you can do that as well. You just want to make sure it makes sense for your taxes as well. But again, if you're just charitably inclined, fine. Um, I I wanted to mention as far as gifting appreciated securities, you know, there's certain parameters around that. If it's appreciated, you know, that means it's it's it's increased in value. Right. Um, you want to make sure that it's been held for long, that it's long term, that it's been held for longer than a year. Yeah. So in other words, if you Coca-Cola wouldn't, you know, but if you bought a stock and it appreciates in six months and then you go to give it, you're not gonna get the full deduction of the appreciation. You'd only get the deduction of the basis. So it has to be held because that's a short-term gain. Right. So you can't just buy something quickly, let it appreciate and then gift it away and be like, okay, I didn't pay the tax on that. I just grew it for a charity. You want to hold it for a year to get the full benefit of that deduction on on the dollar amount that you're giving. Um, just wanted to mention that. So it needs to be held for longer than a year. If it's held for less than a year, then um you only get the basis, not the appreciation of it. So um it's an important distinction to note that. Um so also um those 30 that limitation. So in the example I gave you, where you know, somebody may be giving and maybe they, you know, gave appreciated securities and they were limited to the 30% of adjusted gross income. You can carry forward that. So, in other words, if you didn't deduct all of the charitable contribution, if you didn't deduct all of that, you can carry it forward for five years. And the client that I was thinking of that had just has millions, you know, a few million dollars and no heirs, um, you know, who's giving more than adjusted gross income, you know, that particular client has a large carry forward of charitable and because they couldn't, you can only do like 30% of AGI, you know, so that carry forward, but it's only for five years. And if you don't use it up within five years, then it's lost.

SPEAKER_03

Right. So that's another thing where planning comes into play because you can obviously, if say year five comes around and you don't have uh, you know, you haven't used that up, then maybe you take more from an IRA or something like that, I would assume maybe come into a play, come into play there so that you use up the deduction.

SPEAKER_01

Yeah, you can. You would probably still end up paying more in tax if you use it up. I don't know, it just depends. But like to your point, that's where it's like, okay, where you can, you know, look at it and say, well, what does this look like in the future, though? You know, um, so certainly you can mean what are the future taxes gonna look like? And of course, we don't know what tax rates are gonna do. We can only plan for right now. But if you're gonna have really large deductions or distributions later, then maybe also something I want to mention with the QCD, when it comes to inherited IRAs, you can do a QCD with an inherited IRA if you're over 70 and a half.

SPEAKER_03

Yeah.

SPEAKER_01

Um many people that have inherited IRAs are not 70 and a half. Um so, you know, and the new rule with the new rule with you having to distribute it within 10 years has really put a wrench in that. Exactly. You know, a lot of times as a as a grown child or, you know, other family member, when you inherit those retirement funds, normally you're not in that age range. Exactly. But if you happen to be, right, you know, you can do that. I have seen where, you know, some inherited IRAs were following the old rules the before the secure act, where you could stretch it over your lifetime and then you know, they became 70 and a half, and then they they were giving more to charity at that point and being able to avoid the income completely.

SPEAKER_03

Yeah, which is great, especially if you're still in a you know high-paying job where you're in a higher tax, you know, bracket. So you can that's bigger. Yeah.

SPEAKER_01

Or if, like, you know, you have an inherited IRA and then you have your IRA, and so you have all these IRA distributions, you know, um, you can avoid so you can do that with an inherited IRA. I just wanted to mention that. Um other giving strategies. Um, there are charitable trusts that you can set up charitable remainder trusts, charitable lead trusts. Arun Gupta and I.

SPEAKER_03

Yeah, y'all just talked about this, didn't you?

SPEAKER_01

Yes, it was um the power of trust. It was like talking about 10 different trusts. So we did talk about charitable trusts in there. So I'm not gonna go into huge detail, just know that um, you know, you can do that as well. Um, it's actually episode 307 that released on 10 October 6th. So if you want to defer back to that, talking about different charitable trusts, that's something you can look into as well. And then maybe even private foundations. Um, you know, if you have a large net worth and you're charitably inclined, some families do set up private foundations. And so um that's something else. There's there's different limitations with that. Um, they're more not like a DAF, a donor advice fund. These are, you know, more um limitations in terms of deductions, but there's more work to be done. You know, you have to have a certain, I would say a certain dollar amount to make these worthwhile. It's a way to keep assets in the family, but you know, it may is something that maybe you have a family cause that you're really passionate about. Um, and you set up a private foundation to, you know, either gift over your lifetime or um accommodation there ever when maybe when you pass, and then the family can continue to run that private foundation and makes your assets more perpetual instead of just giving it to charity at the end.

SPEAKER_00

Right.

Bunching Deductions For Impact

SPEAKER_01

Um, you know, and so it can be long-term giving over time. Um, there's the limitations I was mentioning is you know, with private foundations, you're limited to 30% of AGI to cash contributions and 20% um of AGI have appreciated security. So those it has a little bit of different limitations and it does have a lot of administration to it as well. And obviously you'd have to make sense from an asset standpoint.

SPEAKER_03

Exactly.

SPEAKER_01

Um, but it is an option as well. Um, Arun and I did not get into private foundations at in that episode. Um, and then finally, um matching gifts from employers.

SPEAKER_03

Yes. Yeah. So if your employer is, you know, passionate about charity and has a matching opportunity for you, that's great to take advantage of that as well. Yeah. You know, don't leave that on the table. It's kind of like a 401k. You know, if you're already gonna do it, then you might as well get the match from your employer.

SPEAKER_01

Exactly. You can see, usually you can look in your benefits package or somewhere in a you know, human resources to see if that's an option. Yeah. So, you know, they'll do that directly. Um basically, as far as just some practical tips, doing this before December 31st. Um, double check your deadlines for the contributions for the donor advice funds, the QCD. Securities transfers, you know, like you mentioned, we like to have things in by, you know, end of November, no later than beginning of December. Just because if you are doing, I remember, you know, years ago I worked at Charles Schwab and on the advisor side. And um, you know, and we were just, it's crazy. They stay up like all night, like processing all this. It's like all the year-end stuff. And so the sooner you can get it in, the better. And that's why they make such hard deadlines because if you're actually moving securities and doing X, Y, and Z, then they have to have time to get it all done. Yeah, it's a lot of work.

SPEAKER_03

If somebody's actually doing that on the back end, right.

SPEAKER_01

Exactly. Um, just making sure that you have proper documentation, letters, receipts, things like that.

SPEAKER_03

Um which, like if you're doing a QCD and your custodian's gonna issue you a 1099, if you're doing it that way, that's gonna be pretty easy to keep track of.

SPEAKER_01

Absolutely.

SPEAKER_03

Yeah.

SPEAKER_01

Well, to your point, you know, let's say I only did, let's say my my required minimum distribution was 10,000, but I only gave 2,000 to charity. They're not gonna show you that on the 1099R. They're gonna say your distribution was 10,000. You're gonna have to know that 2,000 went to charity to tell your accountant or to put it on your tax return. That's a great point. So, you know what I mean? Because the custodian's not gonna code that. They're just gonna code it as a distribution. Um, so they don't say where it went. You just have to know that and have to have documentation showing that too, which you will with the the checks or with the receipts from the charity. Um, if you miss the deadlines with securities or you don't have securities to do or a QCD, you know, you can do online giving or the check in the mail thing.

SPEAKER_03

Right.

SPEAKER_01

So there's actually, you know, there's an IRS mailbox rule. Um, as long as it's postmarked by December 31st, you know. We're we're cash uh cash basis taxpayers. So as long as it's postmarked, you know, it's not when the charity cashes it, it's not when they receive it or give you the letter. It's if you postmark the check in the mail by December 31st, then you're good.

SPEAKER_03

Yeah, that's a great point.

SPEAKER_01

Yeah. Anything else you can think of?

SPEAKER_03

No, I mean, obviously, all of this is works in concert with your overall plan. And so I think it makes sense to have, you know, a financial advisor in a relationship with a CPA to help you wade through all this because these things may not make sense just in isolation. You know, it might sound good. You might read an article online or hear a podcast, but you know, it really depends on your specific situation, is what I would say.

Carryforwards, Inherited IRAs, Trusts

SPEAKER_01

Absolutely. And if you have questions, you know, they can you can reach out to us. Um, we'd be happy to um schedule a consultation to meet with, you know, one of our financial advisors, such as William now. That's right. Um, just to talk about this. And and so you can do so by going to wiserinvestor.com or by clicking the link in the episode notes. Um, other episodes we've linked here. I mentioned episode 307 about the 10 various trusts that we got into. Episode 180, how does a charitable trust work? Episode 190, You're in Tax Moves, Planning Ahead for Stress Free Tax Season with Jordan Sooty. Um, he's one of the CPAs we work with. And then we just have other financial education videos. What is a charitable remainder trust? Um, linked in the show notes and reduce your taxes and AGI by giving to charity. Well, thanks for listening. Um, today's episode. We will see you next week.

SPEAKER_03

See you guys.

Legacy Guide Download Break

SPEAKER_00

Thanks for listening to a Wiser Retirement Podcast. We hope you enjoyed today's episode. Make sure to subscribe wherever you're listening. That way you don't miss any new episodes. We'd also appreciate if you could leave a rating and review. If you have any questions about anything that was discussed today, head to wiserinvestor.com and reach out. This podcast is strictly for informational purposes only and is not to be considered as investment advice or solicitation to buy or sell any financial products, securities, digital assets, or any other investment vehicles, or a basis to make any financial decisions. Wiser Wealth Management Incorporated is a registered investor advisor with the SEC. The host and or guest may personally own securities, digital assets, or other investment vehicles mentioned on this podcast. Neither the host nor guests of the show are compensated for their participation, and no referral fees are paid to or received by any host or guest for clients, listeners, or similar interests. Investments involve risk, and unless otherwise stated are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, insurance professional, andor legal professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.