The Fallacy of “Just Work Harder”

in

The tax benefits for Americans who give to your nonprofit or ministry are broad and substantial, despite the recent tax reform. Here’s the part of the story you’re just not hearing about from the major outlets.

It’s impossible to be involved in any way at all in the nonprofit community without hearing about the recent Tax Cuts and Jobs Act of 2017. Of course, these tax changes affect all kinds of corporations, but the standard deduction increase for middle Americans, in particular, has fundraising pundits wringing their hands nervously.

The concern boils down to this: If the average American’s standard deduction is raised, then the incentive for charitable giving is reduced because they can receive the same tax benefit without giving to charity at all.

The fear of a decrease in charitable giving was echoed in a recent Guidestar article.

It’s been speculated that this giving cohort may be less philanthropic this year, and in future years, due to the increased standard deduction (therefore less incentive to itemize their deductions).

In light of their concerns that middle-income Americans might be “less philanthropic this year,” they give the following advice:

  1. Ramp up “efforts around low-level donors through direct mail and annual appeals… and major gift prospects…”
  2. Ramp up direct mail and other annual appeals.
  3. Ask your current corporate donors how the new tax law is impacting their future giving decisions—and create a strategy around their answers. Is there an opportunity to ask for an increased annual gift, an event sponsorship, or to pursue that donor who declined in the past?
  4. Reevaluate your relationships with your foundation donors—they may now be in a position to give more. Reconnect with your contacts and make your case as to why your organization needs their long-term support.
  5. Build relationships with donors and emphasize your mission rather than tax benefits.

There are commendable ideas here like emphasizing your mission to donors rather than tax benefits (because that’s the real reason they give anyway) and reconnecting (listening) to your donors. Those are solid pieces of advice we should always be following.

But this whole idea of pushing harder for annual gifts is like trying to stop a train by running faster towards it. No matter how fast you run, you’ll never have enough power to stop the train.

Throwing more money into your cash-based giving fundraising (like annual gifts, major gifts, and corporate annual gifts and sponsorships) simply cannot solve this problem.

It’s time to get off the tracks and try something new.

Changing Times Require Changing Methods

The popular saying, “Insanity is doing the same thing over and over while expecting a different result” really fits here. The article warns us that things are changing in philanthropy—and then advises us to do more of the same thing!

TO BE CLEAR: I am not saying that you should ditch your annual fundraising strategies altogether, whether we’re talking about mid-level givers, corporate donors, or major givers.

But I am saying we need to expand the conversation to fit other solutions to the problem.

Expand Your View of What a Gift Can Be

The bad advice to aim your fundraising efforts at entry-level givers and major givers (thereby cutting out mid-level givers who’re likely to not give as much this year because of the tax changes) focuses on CASH gifts and ignores the fact that higher capital gains taxes will actually be a great motivator to those who can give appreciated ASSETS.

If cash-based gifts were the only (or even “the best”) kinds of gifts your organization could receive, then this might be good advice. But if you expand your view of gifts to include asset-based gifts, you have more chances of surviving the volatile winds of change.

Don’t work harder for cash–Work harder at diversifying the kinds of gifts your #nonprofit actively cultivates. Share on X

Don’t work harder for cash. Work harder at diversifying the kinds of gifts your nonprofit actively cultivates.

Rethink Your View of Direct Mail

The advice to ramp up your direct mail efforts is flawed: Direct mail appeals are declining in effectiveness. And they’ve been in decline way before the new tax bill.

Again, I’m not saying that you should cut out direct mail from your fundraising efforts.

I am saying that you should rethink what you’re saying and trying to accomplish in your direct mail appeals. Just spending more money on doing direct mail the same way is not going to help.

Spending more money on doing #directmail the same old way is not going to help. Tell better stories. Share on X

Instead, “ramp up” your storytelling!

If you are going to stand out in the crowd of 1.5 million nonprofits, you’ve got to tell your donor how you’re changing lives—not inundate them with more junk mail.

Increase Your Value to Corporate Donors

Pursuing corporate donors is a good idea—but try and consider an entirely new spin on the corporate donation equation.

Traditionally, corporate fundraising has always been about showing businesses how they can effectively build their brands by giving to your nonprofit. Your nonprofit’s value for them is basically that you’re a marketing opportunity for them.

But what if you could be more than a brand-building opportunity?

By developing ways to surface corporate donors who are selling closely-held businesses or assets, you can help them save large sums of money in capital gains taxes.

No matter how your corporate donors are affected by the tax changes, they are still able to decrease their tax liabilities by giving to your nonprofit—so use this to your advantage!

Do Relationships Differently

Building relationships with your donors is always important, but too many times, nonprofits get into a rut in their donor relationships. Like corporate donors, you can increase the value you bring to your individual donors through asset-based giving.

The most effective way to add to the benefits donors receive by engaging with you is to introduce them to a safe and trusted third party who serves your donors by guiding them to solutions no-one else is talking about.

Your most impactful donors are unlikely to share the kind of information you need to know in order to mobilize massive gifts.

But with a safe third-party generosity consultant, like The Giving Crowd, you can help your donors discover the best ways for them to pay less in taxes while giving more to the causes they care about.

Expand Your Horizons

There’s more to philanthropy than annual cash-based gifts. By expanding your view of what a gift is, and how asset-based giving can serve your donor’s best interests, you can save your organization from the high’s and low’s of the new tax bill.

For hands-on assistance in moving your nonprofit towards a holistic, asset-based approach to fundraising, let’s talk!

Donor Advised Funds: The Best Financial Tool for Consistent Generosity

in ,

Too many people live reactionary lives, tossed around by the latest round of circumstances life throws at them, especially when it comes to their giving. But there’s an easy way to get control of your giving—donor advised funds!

Like most generous people, you probably have a set of values that drive your philanthropy. Whether you’re writing million dollar checks for capital campaigns or giving a one-time gift of $25, there are reasons why you’re giving your money to that particular cause.

Giving is where the tangible world of money and assets meet the intangible world of altruism, kindness, and faith.

In fact, generosity must be driven by conviction because the giver gets nothing tangible out of the transaction.

The only thing you and I get when we give is the satisfaction of knowing we have lived according to our convictions.

But life can and often does get in the way of our convictions.

Convictions, Generosity, & Joy

Throughout life, people find themselves in the middle of circumstances where everything that could go wrong, does. These rough patches in the road often interrupt their giving habits. Or, they get so busy working and raising a family, that giving just wasn’t at the top of their priority list.

Be proactive and intentional in your generosity so that your giving truly reflects your convictions. Share on X

For those who believe they have a responsibility to steward their God-resources, this fluctuation in their giving violates their conviction. The result is that their satisfaction—their joy—wanes.

Instead of being proactive in their giving, they start giving reactively.

But there is a fantastic financial tool that can help you get out of this cycle — and stay true to your philanthropic and biblical values.

Donor Advised Funds

Since the 1980s, donor advised funds (DAF) have been making philanthropy simple for many donors. You can see this is the rising popularity of their use. Since 2010, the amount of money contributed to DAFs rose by 300%!

Since 2010, donor advised fund contributions have risen by 300%. Are you leveraging this financial tool? Share on X

Donor advised funds are so simple, I call them a “charitable checking account.” Opening a DAF is like having a private foundation without all of the expenses, headaches, and ongoing annual reporting that a private foundation requires.

Donor advised funds allow you to put in cash or assets like appreciated stock, publicly traded stock, real estate interests, business interests, and even dividends from oil, gas, or water rights.

It’s incredibly flexible.

For example, you can put in a piece of land, an apartment building, or rental property, and it allows you to sell the asset inside a tax-exempt environment—exactly in the same way as if you were giving it to a mission agency, college, or church. Because they’re a tax-exempt entity and therefore they could sell this and appreciate the asset tax-free.

When you open a donor advised fund, you enjoy several key benefits:

  1. You enjoy the tax-free environment of a nonprofit,
  2. You get the fair market value deduction of the gift,
  3. You get to advise on the grants given from your DAF, and best of all,
  4. Your cash and asset-based giving along with the required paperwork are simplified.

Now we’ve already touched on the idea that you can sell your assets tax-free within the donor advised fund, just as if you had donated that asset to charity. But let’s dive into the tax deduction with an illustration to show you just how much a DAF can improve your financial outlook at the end of the year.

Fair Market Value Tax Deductions from DAFs

Let’s say you put a stock asset into your DAF, and at the time of purchase, you paid $10,000 for that asset. Now let’s say that asset’s value has risen and it’s now worth $50,000.

If you sell the asset, you will save yourself the taxes you would have otherwise paid on $40,000 worth of long-term capital gains. And you will receive a $50,000 deduction on your taxes that same year!

Now that money is sitting in your “charitable checking account.” And you can direct, or rather, you can advise on where the money will be given.

You’ve given up legal control. You can’t demand that the money goes to a specific charity, but you can advise them. Unless you recommend a charity outside of the protocol, bylaws, or boundaries of your DAF provider, then they are going to follow your advice.

If you think you might be giving to something that is a little edgy, you should check with the donor fund provider in advance.

But the beauty of this is that the DAF allows you to sell your asset tax-free, get a deduction, and now make gifts to your different charities out of one pot instead of going through the expense of setting up a private foundation, and then having an audit, keeping up with the accounting, and so on.

Convenience. Consistency. Convictions.

This leads me to the final (and to me, the best) benefit you will experience in using a donor advised fund. Simple, easy accounting and taxes.

As I write this post, it’s tax season. Specifically, it’s the first week of February. I’ve already received my annual report from my donor advised fund provider.

Back when I gave the majority of my gifts to charity by writing each charity checks from my desk, I had to wait for each of them to get their summary of my giving for the previous year to me. Some would be very prompt, and some not so prompt.

This has caused friction for me as I prepared my tax returns.

That friction can add up and stops a lot of people from giving to their full potential. The more charities they give to, the more time they spend working out the accounting and tax details. There’s a point where it’s simply not worth it!

But with a donor advised fund, my wife and I have a tool that makes the administrative work simple and lets us live out our convictions around biblical stewardship.

And because our DAF helps us be proactive in our giving, we are less vulnerable to the “emergencies” or distraction that are bound to happen in life.

If you’re interested in opening a donor advised fund to simplify your philanthropic life and keep you consistent with your convictions, I highly recommend the following DAF providers:

Interested in discussing your options in asset-based giving? Let’s talk!

The call is free, and there’s no obligation.

Finding Hidden Treasure through Asset-Based Giving

in ,

 

It happens in nonprofits and ministries of every stripe: Too many times, we underestimate the capacity and goodwill of our donors. To find the hidden treasure in and for our donors, we must change our perception of who are donors are and what they want to accomplish.

Recently, I made a call to a gentleman who’d asked for follow up after a seminar I gave at a small church. The voice on the other end had a drawl so thick, I could barely understand him.

Through an awkwardly comical series of my asking him to repeat himself, I made out that he was a farmer. A widower, no children. He was a sweet, gentle guy who clearly loved the Lord.

But I couldn’t understand why he wanted me to talk with him. A real communication failure. So I asked, “Do you have some specific questions based on the webinar a couple weeks ago?”

“No, I don’t think so. But my pastor thought I should talk to you. Because he thought I could sell the farm, and then keep farming, and give money.”

Confused, I still couldn’t make out exactly what he wanted to do or how to help him. I thought, he’s just a nice guy with about 30 acres of land resulting in about a $100,000 of total net worth and wants to give it to the church when he dies. I was about to end the call with a few quick words of advice.

Thankfully, we kept talking. Eventually, it came out that this farmer had 230 acres of land worth $20,000 an acre, and a developer is asking to buy 80 of the 230 acres from him.

That’s a $1.6 million deal.

I finally understood! The farmer had no idea what the capital gains taxes from the sale would be. He wanted to give the proceeds of the sale to the church when he dies, but he wanted to continue farming until he couldn’t do so anymore. He would then need regular income to sustain him.

To find the hidden treasure for our donors, we must change our perception of who are donors are and what they want to accomplish. Share on X

We helped him set up a Charitable Remainder Trust which would provide him a steady income until his passing, at which time, the church would receive the large gift from the sale of the land. In this way, he was able to continue farming on the remaining 150 acres of land and avoid the massive capital gains tax from the sale.

For both the farmer and the small church, it was like finding hidden treasure.

Finding Hidden Treasure for Donors

This farmer with an unintelligible account from a small church in a rural county had an enormous capacity to give — but you wouldn’t know it by looking on the outside.

Despite his significant resources, this man probably lives on $30 to $50 thousand per year.
Humble. Simple. But wealthy.

There was so much latent potential within this humble man. Thankfully, that potential was able to be realized.

Too many times, we underestimate the capacity and goodwill of our donors. Share on X

By tapping into the latent potential of this man’s giving through an asset-based gift, there were profound impacts on his retirement. But then, there was also a tremendous impact on the Kingdom of God through his gift to the church.

Unfortunately, for many donors, nonprofits, and churches, the latent potential for transformational giving within donor assets is often missed altogether.

Hidden Treasure in Retirement Accounts

There is somewhere north of $22 trillion sitting in IRA’s and 401k’s across America—latent potential for good. But there’s also latent potential to save donors thousands of dollars!

Nine out of 10 people that I talk to are unaware of the taxation on their IRA or 401K when they die. These donors have never heard of it, and yet for most of them, it’s going to be the largest tax bill of their life.

For example, the average American with an IRA of $200,000 can pay up to $30,000 or $40,000 in taxes when they die. For a middle-class couple with a combined income of $60,000 or $80,000 per year, that’s a ridiculous, astounding, unbelievable amount of tax.

On the other hand, being able to give a $200,000 gift to charity is equally unimaginable for many middle-class Americans.

It’s an “Aha! Moment” for most people to discover that they could give everything else—their house, life insurance, investments, everything—to their children tax-free by just giving their IRA to ministry.

This is hidden treasure uncovered for your donors through asset-based giving. And of course, it’s a hidden treasure uncovered for your organization.

Hidden Treasure in Business Sales

VIP Forum estimates that 82 percent of baby boomers that have a family business will sell that business as they approach retirement rather than pass it to the next generation.

When they sell the business they started in their garage and scaled it to a million, 10 million or 100 million dollar operation, they’re going to encounter an astoundingly high tax bill. The taxes on these sales are significant.

But what if they could cut those taxes and instead, direct the money to go to the charity they care about?

In our consultations with donors, we routinely show them how they can reduce those taxes by 50 to 80 percent. In fact, sometimes they can eliminate them all together in favor of the charities they care about, making the capital gains tax a voluntary tax.

Baby Boomers who are selling their businesses, and those with currently “untaxed” retirement accounts, can give that money to the government because they just weren’t paying attention or do so out of ignorance.

But if you show them how they can elect to (oftentimes) increase their retirement income, provide generously for their heirs, and disinherit the government in favor of their favorite charities, you will be helping them find hidden treasure for themselves and your organization.

If you would like to know more about finding hidden treasure for your donors by discussing asset-based giving options with them, let’s talk!

Are You Leaving a Tax Burden for Your Heirs?

in ,

 

You may be leaving a huge tax burden for your children or heirs. Here’s how to disinherit the government while establishing your legacy and helping secure your children’s future.On the day you graduate from this earth, everything you have will pass on to someone else to steward. Properties, vehicles, accounts, cash—everything. You might already be planning for this and named your spouse as the beneficiary of your estate if you pass on before him or her. But what happens when both you and your spouse have left this world for the next? (Financially speaking, that is.)

Most people assume their assets will simply pass on to their children, and it most likely will… after the IRS has taken their 30 – 35% cut. What if there was another way?

The Tax Burden on Your Heirs

It all happens unexpectedly for many people who inherit their parents’ estate. When a person and surviving spouse passes away, their estate passes on to their children. But when the kids go to cash in the remaining fund in their parents’ IRA or 401 (k) account, the IRS steps in and charges them ordinary income tax on it. This is called the Income in Respect to a Decedent (IRD) tax—and it is truly the most overlooked tax in America.

In fact, even financial experts can forget all about it until it’s too late… like this banker I met once.

Didn’t See that Coming

The gentleman strode up to me directly after a planned giving presentation I made at a church. His eyes were wide as he said…

“Richard, I have been in finance all my life. Nobody’s ever talked to me about IRD taxes. Nobody ever brought it up. I never thought about it.”

Think about that! A banker, a career finance man, who had never thought about the tax burden he would be leaving to his children. He continued.

“I have over $3 million in qualified retirement funds. My wife and I plan to travel when I retire, and we intend to use that up. But if we don’t, I am happy to give that to my church—I never thought of that as a part of my estate planning!”

The sad reality is that most professional finance and legal counsel are not trained or set up to help you set up your estate plan in a way that passes on your values as well as your valuables. And this missing focus on charitable estate giving would have affected this banker personally. His two daughters would inherit the estate—and all the IRD taxes that would come with it. But now that he knew about the IRD tax, he was happy to make a gift to the church from his remaining retirement funds and lower the tax burden his daughters would be responsible for.

3 Asset Destinations

There are only three places your remaining assets can go when you pass away.

  1. Your Children and/or Heirs
  2. The IRS
  3. Charity

By default, your children and/or heirs will inherit the remaining funds in your IRA or 401 (k) accounts—and so will the IRS through the IRD tax. But if you choose to send a portion of your remaining assets to charity, you can significantly lower the tax burden your children will have to pay when you and your spouse pass on.

By naming a charity in your will or estate you can significantly lower the tax burden your children. Share on X

Leaving a charitable gift in your estate or putting a charity, ministry, or church in your will is something that you have control over for now. And by choosing to give to charity out of your estate, which is much easier than you may think, you can disinherit the government while leaving a strong legacy for your children and the world.

An Overlooked Opportunity

Most people haven’t placed a charity into their estate plan. They just haven’t thought about it. They’re generous, wise people—it just never came up. But you can change that today.

You can leave an inheritance that will care for your heirs and a legacy that will impact your community by placing a charity or church in your estate plan. And if you need some experts guides to help you lower the tax burden on your children, our estate planning counselors would be happy to speak with you.

The call is free and there’s no obligation. So, let’s talk!

Why You Must Have an Estate Plan

in ,

 

When is the Right Time? Importance of EOF Planning

Creating an estate plan is something we often put off till another day. The problem is, none of us is guaranteed another day will arrive. That’s why you must have an estate plan as soon as possible.

The only thing that is certain is death and taxes.

But with taxes, at least you know the deadline. With death, you don’t know when your time is going to come.

We can live to reach 100, or we pass all too soon. For many of us, death takes us by surprise.

At The Giving Crowd, we encourage folks to take a fresh look at their estate planning every 3 to 5 years. Share on X

You should check your estate plan and refresh it every 3 to 5 years because significant life events that change the number of your dependants like getting married or having more children will affect the financial and legal details of your plan.

For example, it’s easy for a young couple to dismiss an estate planning session or a need for a will. They’re young, just getting started in life, and may not have much beyond student debt.

But, once you have that baby, the whole world changes. It becomes imperative because you are taking care of someone else’s life.

Without a will or a trust, the state has the right to decide what happens to your child(ren). (It’s called the law of intestate succession.) Your child could end up with a relative that is unfit.

Worst-case scenario: your child could end up as a ward of the state.

On the other end of the sociological gamut is the business owner or the wealthy executive.

These individuals have a different level of estate planning needs. They are concerned about their family, but their estate also contains their business, investment properties, and other assets.

Living Trust Vs. Estate Plan

People of all backgrounds assume that if they have a living trust, then they are all set.

This is not true — a living trust only avoids probate and maintains the confidentiality of the estate.

The individual’s estate is still exposed to state and federal taxes. Without proper estate planning, these individuals open themselves up to a much wider variety of taxes that can erode the balances of the estate.

A Complete Plan

All too often, estate plans lack succession planning which forces a sale of these assets and closure of the family business. The ensuing chaos is all due to inaccurate, improper planning.

An incomplete estate plan can leave your heirs with a smaller inheritance, little impact, and a large tax bill. Share on X

Proper planning, on the other hand, can reduce or even eliminate state and federal taxes connected to the estate. A proper plan of action provides your heirs with:

  • A succession plan that arranges for the smooth transfer of business assets such as a business, investment properties or investment portfolio.
  • A larger portion of the estate because taxable areas concerning the estate are partially or completely eliminated.
  • A distinct reminder of family values that are bestowed to the next generation because the previous generation has donated to charities consistent with the family’s traditions and values.

You Can Count On It

So, whether you have a modest or a massive estate, death and taxes are both certain.

Proper planning is a way to avoid the tax portion. A traditional living trust is not enough — it’s just one element of your estate plan.

There are several nontraditional items that can be used to disinherit the government and make sure your assets go to your family and favorite charity. You have the power to avoid the common pitfalls surrounding death and taxes with proper end of life planning.

To learn more about how to disinherit the government and create a legacy with your estate for generations to come, let’s talk.

The Simple Retirement Planning Hack that’ll Save You Thousands

in ,

 

Demystifying Inheritance Taxes

Up to 40% of the wealth you pass to your heirs above the tax-free mark will go to the government — unless you implement this little-known retirement planning hack.

When I began this work in 1980, the amount that Americans could pass tax-free to the next generation was $161,000. Everything above that amount was taxed at the federal level to as much as 70% percent! Yikes!

Thank goodness those days are distant memories.

Today, each of us can pass more than $5 million to the next generation tax-free — (nearly $11 million for married couples) if you know this often overlooked planning step.

In truth, there are very few people that will be faced with the inheritance tax, estate tax or what’s otherwise known as the death tax.

However, the tax that does affect most everyone — including you — is the IRD (Income in Respect to a Decedent) tax.

In short, this tax involves the normal tax on a person’s IRA, 401(k) or 403(b).

These accounts require taxes to be paid because the individual did not pay the tax prior to putting money into these accounts while they were working.

The benefit was that you could have lower taxes now and then those taxes would be paid later when in retirement. The IRD tax is typically applied when a person dies prematurely or submitted a substantial amount in the IRA, 401(k) or 403(b).

And it doesn’t matter whether you’ve got $10,000 or $2 million in this type of retirement plan, you’ll be paying a heavy income tax rate on that money.

In some cases, up to 40 cents on the dollar.

There are several solutions to this tax situation. But here’s the simple hack that could save you thousands.

Simply, change the successor beneficiary on your IRA, 401(k) and 403(b) accounts to a charity.

When you die, you can give an unlimited amount of money to your spouse tax-free.

However, unless you change the designation, you will still pay the IRD tax rate on every dollar you tucked away for retirement.

So, what do you do once your spouse inherits these accounts, tax-free?

Then, change the beneficiary on your spouse’s accounts to a charity.

This type of account does not go to the living trust or to your children — only to the charity or charities you’ve designated.

If your spouse and you do not do this, the tax bill could be up to 40 cents per dollar. That means on a $1 million 401(k) account, the tax bill could be $400,000!

In changing the beneficiary to a charity, you eliminate the IRD or income tax bill and create possibly the largest gift in your lifetime.

Have you disinherited your children? No.

In fact, everything else is tax-free to your heirs: life insurance, investment property, investment portfolio, etc.

All will pass to your heirs tax-free through your estate — that is unless your estate has exceeded that $5,490,000 limit.

For most families, this enables your children to receive a clear majority of your estate tax-free…

…AND your selected charities will receive a generous gift…

…AND you’ve eliminated the most overlooked tax in America.

To save you and your heirs thousands of dollars in death-related taxes, we offer a service helping donors like you explore ideas on maximizing your tax savings potential through giving.

No cost. No obligation.

If you want to see how you can minimize your tax liability by giving to charity, let’s talk!

How to Save Tens of Thousands of Dollars in Overlooked Taxes

in ,

 

You Have a Tax Problem But You Don’t Have To

Paying the taxes you expect to pay is hard enough — but paying unexpected taxes is super painful and often avoidable! But you can save tens of thousands of dollars in these commonly overlooked taxes by being generous with your IRA and 401(k) accounts.

Tax time can be such a headache — especially if you have multiple retirement accounts from various places of employment.

$50,000 here… $100,000 there… It makes me thankful for accountants!

Most financial professionals recommend rolling over the various IRAs into one account.

Despite this advice, people have told me that they keep these IRAs separate so that they know which one will “pay” their future “death tax.” Or they tell me they are going to hold off on doing anything with those accounts because they will just roll over into their children’s IRA accounts.

In either case, these folks are only putting a bandaid on the problem.

They still have a tax problem that hasn’t been solved.

Thirty years ago, the IRS created these accounts to help average Americans save money for retirement while also stretching the paycheck.

However, when planning for the latter stages of life, most people forget they still owe taxes on their IRAs, 401(k)s, etc. They treat it like regular income.

Overlooking these retirement account taxes can produce quite a shock!

For example, if you have $250,000 sitting in your 401(k), when you empty the account, the math will look something like this:

$250,000 x 35% (Average American tax bracket) = $87,500 TAX BILL

That is a VERY steep tax bill to forget about — and a huge windfall for the US Government!

By some estimates, there is over $15 trillion sitting in IRAs and 401(k)s!

Doing the math again, this means the government will receive trillions of dollars in death-related estate taxes from baby boomers passing away with money left in their retirement accounts.

But these taxes can be diverted. Your accountant or your financial advisor might have even suggested some of these options:

  • Give an unlimited amount to my spouse tax-free,
  • Give your kids the IRA to avoid the taxes to your estate, or
  • List one of the IRAs as the one that is going to pay all the estate and death taxes.

However, these just shift the fiscal responsibility elsewhere instead of eliminating the tax altogether.

The headaches continue.

When IRAs were created 30 years ago, no one expected to have over $15 Trillion sitting collectively in peoples’ accounts.

Today, those resources are static and not making a difference in anyone’s life.

But what if there was an option to use these static funds to bless an organization or mission you cared about?

Wouldn’t it be amazing if you could disinherit the government…create a legacy gift for an organization you cared about…and not significantly affect the resources you have to pass to future generations?

You can! It’s simple.

Donate the IRA or 401(k) to a charity of your choice.

There are a variety of ways to save tens of thousands of dollars in retirement account taxes. Some options can be implemented during your lifetime and others upon death.

Here are two that I recommend fairly often:

Way #1: Give up to $100,000 to a charity…tax-free.

Anything over that will need to pay income taxes. Couples over 70½ can give up to $100,000 each.  You will still be paying some taxes — but you won’t be paying unnecessary taxes.

Way #2: Change your 401(k) or IRA successor beneficiary to a charity or nonprofit.

In changing the estate recipient to a charity, it will eliminate the tax responsibility. This allows you to pass your house, your life insurance and other assets to your heirs tax-free.

In the end, it’s not about the money. It’s about the impact you want to make.

Any way you choose to save your retirement money by giving, you can make a larger impact on the world than you ever imagined.

And it’s certainly more inspiring than giving your money to the government!

What kind of life-giving impact can you make with your retirement funds by saving tens of thousands of dollars in taxes? How can you make that a part of your legacy?

To save you and your heirs thousands of dollars in death-related taxes, we offer a service helping donors like you explore ideas on maximizing your tax savings potential through giving.

No cost. No obligation.

If you want to see how you can minimize your tax liability by giving to charity, let’s talk!