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Retirement in America: Maximizing Your Charitable Gifts

Posted Tuesday, May 2nd, 2017

Member Submitted

Submitted by: Derek Fiorenza, COO/CCO, Summit Group Retirement Planners, Inc.

There are numerous non-profit organizations that are striving to serve others and make the world a better place. Giving back to others in an effort to make the world a better place is one of the best feelings in the world. With that said, there are many types of donation strategies that exist for individuals to pursue which can benefit non-profit organizations.

Financial Tools to Maximize Charitable Contributions

Individual Retirement Accounts (IRA’s) Required Minimum Distributions (RMD’s)

The government mandates RMD’s be taken from IRA’s upon reaching age 70 ½. These distributions can be donated directly to a tax-exempt charity as “qualified charitable distributions” and are income tax-free at the federal level. In addition “qualified charitable distributions” can translate into significant tax savings for the donor while improving the efficiency of the donation as they are not included in the donor’s Adjusted Gross Income (AGI).

Life Insurance Legacy Gift

Individuals can donate all or a portion of their life insurance policy by making the charity the owner and beneficiary of the policy. By donating the insurance policy, individuals can receive an immediate charitable deduction for income tax purposes based on the lesser of the policy’s fair market value or their cost basis. If the individual continues to pay the premiums, payments can also be a charitable donation. An additional benefit is that once the insurance policy is donated, it is removed from the donor’s estate, which can translate into estate tax savings. Upon death of the donor, the charity receives the face amount/death benefit tax free.

Gifts of Stock

Individuals can donate all or a portion of their “long-term appreciated securities” (stocks, blonds, and/or mutual funds) directly to charities to enhance the contributions they receive. Long-term appreciated securities with unrealized gains (securities purchased over a year ago with a current value greater than original cost) can be donated to a charity for a tax deduction up to the full fair market value of the securities (up to 30% of donor’s AGI). Lastly, the donation of securities eliminates capital gains taxes as securities are no longer sold so a gain isn’t realized. The greater the appreciation and donation of the securities, the larger the tax savings will be.

Key Takeaways

These are three creative strategies that can be implemented to maximize the tax savings for the donor while providing a great benefit to the recipient charity. There are many other ways to contribute, all of which are not financial. Contributions of time can many times be as impactful if not more as that of financial donations. There are many worthwhile charities that depend upon the generosity of others to continue to serve their constituents and we can all make a difference by offering our support.

Further Reading

For further information, please contact a Summit Group Retirement Planners, Inc. Representative: 267-433-1050 or dfiorenza@sgretirementplanners.com. Summit Group Retirement Planners, Inc. specializes on collaborating with employers on the design, installation, and ongoing servicing needs of their retirement programs.

Investment advice offered through Summit Group Retirement Planners, Inc., a Registered Investment Advisor. This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation.


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