Lifepoint Financial Design – LifePoint Financial Services – Mike Metzger Financial Planning

This year has brought many challenges that were not expected and difficult to overcome. There were those who have lost work due to the pandemic, causing a ripple effect of financial troubles. There were those who were affected by hurricanes, floods, wind storms and earthquakes. People lost loved ones without being able to be by their side.

Though this year has brought some tragic difficulties, there are also opportunities to give back to those harmed by this year’s events or any cause through smart financial strategies. You can help those in need by doing what you would already be doing at year-end, looking at your yearly financial plan and determining the best way to meet your overall financial goals. If you don’t know how you might be able to do that, I’ll provide you with a few smart strategies to help both you, and those others who need your help.

1) Donor-Advised Funds

Donor-Advised Funds are dedicated charitable investment accounts that you can use to provide monetary giving to various charities. Donor-Advised Funds are flexible and provide huge value to both the charities selected and your financial tax strategy. Here are some of the great benefits offered through this charitable investment vehicle:

·  Immediate fair-market value charitable deduction upon contribution to the fund- even if not dispersed to the charity yet

·  Ability to contribute many asset classes- highly appreciated stock (removing capital gains), cash, or others.

·  Low minimum funding requirements

·  Single donation can go to multiple 501c(3) charities

·  Assets invested in the fund grow tax-free for the charity

· Can set up reoccurring “tithing” contributions or use it on a year-by-year basis tailored to your tax situation

2) Qualified Charitable Distribution

Under the CARES Act, a qualified charitable distribution allows any IRA owner over 70.5 years of age to make a distribution of up to $100,000 to go directly to a charity free of income tax. If you are married, each spouse can make the distribution, potentially distributing up to $200,000. What makes the qualified charitable distribution so valuable is that with the increase in standard deduction, many individuals could no longer use charitable deductions. Here are some other benefits to this charitable financial strategy:

·  Distribute IRA dollars without having to pay the typical ordinary income tax

·  Provide a large benefit to charity without losing the standard deduction

·  Reduce your IRS mandated required minimum distribution which lowers your overall income tax

· Reduce the potential of losing certain deductions, exemptions, credits, phase-outs, and the 3.8% net investment income tax, among others. 

3) Charitable Remainder Trust

Without getting too far in the weeds on different types of charitable remainder trusts, these types of investment accounts can provide much value to both you and the charity. These accounts are great for transferring highly appreciated securities, such as stock, and receive a large charitable deduction. In addition, you can receive an income stream from the assets held in the remainder trust, while also having removed capital gains from the sale of the appreciated securities.

Depending on your unique circumstance, there are different types of charitable remainder trusts that might provide a bigger benefit to both you and your charity.

In a time of great need, there are many financial strategies you can structure to help those causes that you care about. Outright gifts of cash are great, but it might benefit you to look into other avenues that may allow you to contribute even more. Charitable deductions are incentive in the IRS tax code to provide some big benefits back to you. Make sure you find the right avenue to give that fits your unique financial plan. 

If you don’t have a financial planner who understands your needs, I’m here to help. Just click the “TALK TO MIKE” button for a complimentary consultation or download our FREE GUIDE HERE!


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.

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