As the year winds down, there’s much to consider in terms of investment, retirement, tax, and gift planning. VWG recommends focusing on required minimum distributions, tax loss-harvesting, and establishing various tax-advantaged vehicles such as 529 savings plans and employer-sponsored retirement plans. Charitable giving is also a top priority for our clients. Here is an overview of various ways to achieve your philanthropic goals:
Set up a Donor Advised Fund: A Donor Advised Fund (DAF) is a simplified approach to supporting charities while maximizing charitable contributions and tax benefits. It is a single account that is titled in your name or a name of your choosing. You make an irrevocable contribution of personal assets such as cash, stock, real estate, or even private interests, which allows you to claim an immediate tax deduction at the time of contribution. After your DAF is funded, you can use it to direct charitable grants to the organizations you choose. Grants can be made over a period of years, even though the tax deduction is taken in the year of funding. Excess funds in your DAF can be invested as you choose while you wait to direct future grants.
Donor Advised Fund Tips:
Consider Charitable Gift Bunching: Due to recent tax law changes, the ability to itemize deductions has diminished for many taxpayers. The standard deduction has nearly doubled, and a number of common deductions have been capped or eliminated altogether. Those who are charitably inclined should consider ‘bunching’ multiple years of planned charitable donations into a single tax year to allow them to itemize tax deductions.
Charitable Gift Bunching Tips:
Make a Qualified Charitable Distribution: A Qualified Charitable Distribution (QCD) is a direct transfer from your IRA to a qualified charity. A QCD is counted towards satisfying your required minimum distribution (RMD) for the tax year, and it is not deemed to be taxable income. Keeping your AGI lower may allow you to remain in a lower tax bracket which could reduce the impact of certain tax credits and deductions, such as Social Security and Medicare. Unlike Donor Advised Funds, QCDs do not require you to itemize deductions to realize these substantial tax benefits.
Qualified Charitable Distribution Tips:
Keep in mind that for tax years 2020 & 2021, the CARES Act expanded the deductibility of charitable contributions to incentivize charitable giving during the pandemic. This temporary change in the law allowed taxpayers to deduct up to $300 per taxpayer ($600 for married couples) without itemizing. In 2022, the temporary rules ended. Consider using a Donor Advised Fund, Qualified Charitable Distribution, or gift bunching to fully maximize your charitable endeavors. We encourage you to reach out to your VWG financial advisor to discuss philanthropic strategies for this year and beyond.
VWG Wealth Management is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC. All information referenced herein is from sources believed to be reliable. VWG Wealth Management and Hightower Advisors, LLC have not independently verified the accuracy or completeness of the information contained in this document. VWG Wealth Management and Hightower Advisors, LLC or any of its affiliates make no representations or warranties, express or implied, as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. VWG Wealth Management and Hightower Advisors, LLC or any of its affiliates assume no liability for any action made or taken in reliance on or relating in any way to the information. This document and the materials contained herein were created for informational purposes only; the opinions expressed are solely those of the author(s), and do not represent those of Hightower Advisors, LLC or any of its affiliates. VWG Wealth Management and Hightower Advisors, LLC or any of its affiliates do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax or legal advice. Clients are urged to consult their tax and/or legal advisor for related questions.
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Hightower Advisors, LLC is a SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Some investment professionals may also be registered with Hightower Securities, LLC and offer securities through Hightower Securities, LLC, member FINRA/SIPC. You can check the background of our firm and investment professionals on brokercheck.finra.org. Unless otherwise indicated relative to a specific award or ranking, Hightower Advisors, LLC does not pay a fee to be considered for any ranking or recognition, but may have paid to publicize rankings obtained and disseminated prior to 11.4.2022. All awards / rankings / ratings obtained and distributed on or after 11.4.2022 will be accompanied by specific disclosure as applicable.
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