Charitable Giving

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Webinar in Review: Charitable Giving Strategies

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The New Year is a great time to get your charitable giving plan in place for the New Year. With the fairly recent tax law changes, you may be finding that it is more challenging than ever to give to the way you want while still reaping the tax benefits for doing so. Feel free to watch the recorded webinar with Sandy Adams, CFP® and Jana McNair from the Wayne State University Development Department as they discuss strategies for charitable giving that can help you get a more pro-active and tax-efficient plan in place to start the year off right.

Check out the time stamps below to listen to the topics you’re most interested in:

(02:00): Intro & Agenda

(09:30): Taxes & Charitable Giving 101

(13:30): Make Charitable Contributions and Still Get a Tax Benefit

(16:45): Tip #1: Donating Appreciated Securities

(21:00): Tip #2: Donor Advised Fund

(26:30): Tip #3: Qualified Charitable Distribution (QCD)

(34:00): Planned Giving Ideas for Impactful Giving

(41:00): Takeaways for Charitable Giving

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500 Books Donated…and counting!

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The Center is just half way through our book collection drive for Rx for Reading Detroit.  I am thrilled to report that over 500 hundred books have been donated so far!  As we packed up the books to donate, we smiled to see some of our childhood favorites… remember the Hardy Boys adventures?  There were also more recently published classics like the Harry Potter series. I’m excited to know that these old and new stories will be filling the Little Libraries in Detroit soon!

When my parents recently relocated, my siblings and I were all handed a box of childhood mementos.  My mom said she could not throw them away, but the box did not make “the cut” to move to their new house.  Sound familiar to anyone?  After laughing at my childhood arts and crafts efforts, I found several books that I loved as a kid. I can’t think of a better way to show my appreciation for those stories than to share with the next generation of young readers.

We are so appreciative of the donations from clients, team members, and Center friends to this worthy charity.  If you are wondering if you can still participate, it’s not too late! We will continue collecting books through July 31st. 

If you are interested in donating, we are collecting gently used or new books, appropriate for elementary through high-school aged students. Rx for Reading Detroit is able to purchase books at a deep discount, so if you’d like to make a cash donation, please send directly to: Rx for Reading Detroit, University of Detroit Mercy, 4001 W. McNichols Road, Detroit, MI 48221. The Little Libraries used by Rx for Reading are constructed by Center client, John Mio.  

For more information about our event, please click here: Collecting-books-for-donation-to-rx-for-reading.

Jeanette LoPiccolo, CRPC® is a Client Service Manager at Center for Financial Planning, Inc.®

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Charitable Giving Reminder Due to New Tax Law

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Contributed by: Timothy Wyman, CFP®, JD Tim Wyman

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Are you making charitable contributions in 2018? 

There are three parties to every charitable gift; the charity, you, and the tax man. Due to the increased standard deduction, many folks will NOT receive an income tax benefit when making direct contributions to charities.  For those over the age of 70.5, consideration should be given to making charitable contributions via your IRA. For those under the age of 70.5 you should consider “bunching” your contributions into one year; a donor-advised fund can be quite useful. 

If we have not had an opportunity to discuss either of these strategies, and you expect to make charitable contributions, please feel free to contact our team to discuss your options in making tax-efficient charitable contributions.   

Here are two links to articles outlining the QCD strategy. 

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Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc.® and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Timothy Wyman, CFP©, JD and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. This material is being provided for information purposes only. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. You should discuss any tax or legal matters with the appropriate professional.

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International Women’s Day Celebration with The Center

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On behalf of The Center team we want to thank everyone who participated in our First Annual International Women’s Day event!  The energy in the room of 200+ women on March 8th was an inspiration sure to carry on throughout the year.  Celebrating women’s success and making a difference in other women’s lives carries a message of community and mutual support; a WIN-WIN with staying power.

Our keynote presentation by Laura Vanderkam was a gift of wisdom and practical application as she helped us understand how to focus on aligning our time with priorities.  Before, during and after the presentation it’s no surprise that networking conversations were abundant from start to finish.  A truly remarkable exclamation point on the morning was the generous spirit in which financial donations were made for Haven’s Spark program. 

DONATION RESULTS

An amazing result for Haven’s Spark program:

$5,295 (so far!)

RESOURCE DIRECTORY

Networking connections are an essential ingredient to success.  If you have not already reached out to new connections we are happy to provide this resource directory of the companies and organizations who were participants in our Women’s International Day event.

KEYNOTE TO-DO LIST LINK

Laura’s advice hit home as evidenced by all of the head nodding going on in the room!  If you missed the link to our “more balanced life” To-Do list click here to open your personal copy!

PHOTO GALLERY

Smiles and memories of our time together at The Center sponsored Women’s International Day event. Click to view.

SAVE THE DATE 

Plan to celebrate International Women’s Day with us again next year on Friday March 8th 2019!  You can mark your calendar and we will take care of all the details!  

IN CLOSING

Women celebrating women is one example of pooling resources around a common goal.  We are grateful to have so many professional connections and women advocates in our circle of friends.  In our world of financial planning, it is not uncommon to work with accomplished women who are seeking guidance to ensure that their present plan for financial security is on track for future success.  One hurdle is that many times they don’t know someone …… consider that we might be that someone!

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc.® In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie is a member of the Leadership Oakland Alumni Association and is a frequent contributor to Money Centered.

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Warming Haven's Hearts on Valentine's Day

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Contributed by: Nancy Sechrist Nancy Sechrist

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The “season of giving” never really stops when the holidays are over.  There is a need for help and assistance throughout the year: winter, spring, summer and fall.  Over the last few weeks, The Center Team has come together to make 30 fleece blankets for the women and mothers at a women’s shelter called Haven in Oakland County. Haven offers a comprehensive program for victims of domestic violence and sexual assault and provides shelter, counseling, advocacy and educational programming.

The Center’s Creativity and Charitable Committee, along with other Center Team members spent time together cutting and tying knots of soft and colorful fleece material to make warm blankets.  We all know how good it feels when you receive something handmade - whether it’s a picture drawn by your grandchild or a knitted scarf – what makes it special is that somebody took the time to make something unique for you.  The blankets will be delivered to the women as a Valentine’s Day surprise, with the hope that these blankets will brighten and uplift the women at Haven to give them comfort, warmth, and knowing they are cared about.

As Author Leo Buscaglia wrote, "Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around."

With hopes that all are kept warm and safe during this cold winter season…

Nancy Sechrist is the Office Manager at Center for Financial Planning, Inc.®

Raymond James is not affiliated with Haven.

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Tax Reform Series: Changes to Charitable Giving and Deductions

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Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

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The Tax Cuts and Jobs Act (TCJA) is now officially law. We at The Center have written a series of blogs addressing some of the most notable changes resulting from this new legislation. Our goal is to be a resource to help you understand these changes and interpret how they may affect your own financial and tax planning efforts.

If you’ve heard the charitable deduction is going away under the Tax Cuts and Jobs Act of 2017, you are certainly not alone – this is a common misconception under our new tax code.  To be perfectly clear, gifts to charity are certainly still deductible!  However, depending on your own tax situation; your deduction may not provide any tax savings due to the dramatic increase in the standard deduction moving into 2018: 

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Standard Deduction vs. Itemizing Deductions

Think of the standard deduction as the “freebie deduction” that our tax code provides us, regardless of our situation.  If you add up all of your eligible deductions (state and local tax, property tax, charitable donations, medical expenses, etc.) and the total happens to exceed the standard deduction, you itemize.  If they fall short, then you take the standard deduction.  Pretty simple, right?

With the standard deduction nearly doubling in size this year, many of us who have previously itemized deductions will no longer do so.  Let’s take a look at how this change could impact the tax benefit of your charitable donations:

Example

Below is a summary of Mark and Tina’s 2017 itemized deductions*:

  • State and Local Taxes = $6,600

  • Property Tax = $6,000

  • Charitable Donations = $5,000

  • Total = $17,600

  

Because the standard deduction was only $12,700 for married filers in 2017, Mark and Tina itemized their deductions.  However, the only reason why they were able to itemize was due to the $5,000 gift they made to charity.  If they didn’t proceed with their donation, they simply would have taken the standard deduction because their state and local tax along with property tax ended up being only $12,600 – $100 shy of standard deduction for 2017 ($12,700).  Their gift to charity created a tax savings for them because it went above and beyond the amount they would have received from the standard deduction!

For the sake of our example, let’s assume Mark and Tina had the same exact deductions in 2018.  It will now make more sense for them to take the much larger standard deduction of $24,000 because it exceeds the total of their itemized deductions by $6,400 ($24,000 – $17,600).  In this case, because they are taking the standard deduction, there was no direct “economic benefit” to their $5,000 charitable donation. 

*This is a hypothetical example for illustration purposes only. Actual investor results will vary.

Planning Strategies

Because many clients who previously itemized will now take the larger standard deduction, reaping the tax benefits for giving to charity will now require a higher level of planning.  For clients who are now taking the standard deduction who are charitably inclined, it could make sense to make larger gifts in one particular year to ensure your charitable deduction exceeds the now larger standard deduction. Or, if you’re over the age of 70 ½, the Qualified Charitable Distribution (QCD) could be a gifting strategy to explore. Of course, we would want to dig deeper into this strategy with you and your tax professional before providing any concrete recommendations. 

For most of us, the number one reason we give to charity is to support a cause that is near and dear to our heart.  However, as I always like to say, if we can gift in a tax efficient manner, it just means additional funds are available to share with the organizations you care deeply about instead of donating to Uncle Sam. 

Don’t hesitate to reach out to us for guidance surrounding your gifting strategy, we are here to help!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

 

 

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2017 Year-End Financial Planning

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Contributed by: Josh Bitel Josh Bitel

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With the fourth quarter upon us, tedious tasks like assessing your financial situation can often fall by the wayside.  With that in mind, this is a good time for us to share some important items to consider before the end of the calendar year. Here are a few things to consider before you take on 2018.

Establish or tighten up your emergency fund.

As we often recommend, keeping three to six months worth of expenses saved in an easily liquidated and accessible account can protect you against any unforeseen perils that may arise. Getting an emergency fund in place before the year wraps up is a great way to jump-start your budget for 2018.

Check your flexible Spending Account

Make sure you don’t end the year with a balance inside your FSA plan. Most of these plans have a ‘use it or lose it’ feature. So if you’re putting off that pesky doctor’s visit or are overdue for a new pair of prescription glasses, use your pre-tax dollars you’ve elected to cover these expenses!

Review your retirement accounts to make sure you’re on track to maximize your contributions

Whether it is an IRA account, either traditional or Roth, or an employer sponsored plan, the end of the year is a great time to assess your contributions and make sure you’re on track to meet your goals. This is important for your tax situation as well, as you may be able to deduct contributions to certain retirement plans. Although IRA accounts can be funded up until April 15th of the following year (up to $5,500 if you’re under age 50), it’s never too early to make sure you’re on track!

Give a tax-deductible charitable contribution

The end of the year is a time when we’re all thinking about giving. If you are charitably inclined, the end of the year is a great time to donate to any causes you are passionate about so you can receive a write off on your taxes for 2017. Don’t forget, donating appreciated securities from a taxable account is often more advantageous for you and the cause you believe in! Make sure you are making this donation for something you really believe in and not just for the potential tax write-off, the holiday season is a great time to asses this.

As always, in regard to your financial life, we are here to assist in anyway we can. These are just a few of the things you should keep in mind as the year wraps up. If you have any questions regarding your personal situation, contact us here at The Center for Financial Planning.

Josh Bitel is a Client Service Associate at Center for Financial Planning, Inc.®

Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional.

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Webinar in Review: Year-End Tax Planning

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Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

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On November 14th, Melissa Joy, CFP® and I hosted The Center’s annual Year-End Tax Planning Opportunities and Strategies webinar which continues to be one of our best attended discussions throughout the year.  In 2016, Melissa and I hosted the webinar two days after the presidential election and this year, the presentation was held several days after the latest GOP tax reform proposal.  Needless to say, it’s been a great chance for our team to share timely updates with clients and strategic partners! 

If you weren’t able to attend the webinar live, we’d encourage you to check out the recording below.  Here are a few key points and takeaways from our discussion:

Potential Tax Reform Highlights  

  • Moving from seven tax brackets down to three or four: 12%, 25%, 35% and 39.6%

  • Elimination or caps on popular deductions:  State and local taxes, medical expenses, student loan interest, mortgage deduction cap, property tax cap

  • Larger standard deduction (almost doubling from $12,700 for married filers to $24,000)

  • Repeal of Alternative Minimum Tax (AMT)

  • Corporate tax reduction (moving down to 25%)

  • Estate tax exemption (almost doubling from $5.5M to $11M, with the goal of repealing the estate tax completely within 6 years)

2018 Updates

  • Social Security Cost of Living Adjustment (COLA), Medicare premium adjustments, retirement plan contribution and income limit adjustments, etc.)

Retirement Planning   

  • Evaluate your savings rate moving into the new year and if you’re not maxing out your 401k ($18,500 or $24,500 if over the age of 50), consider increasing your savings percentage by 1% - 2% each year

  • Work with your advisor to determine if the Traditional (pre-tax) or Roth (after-tax) retirement vehicles makes sense for your situation given your current and projected future tax bracket  

Charitable Giving

  • Consider utilizing a Donor Advised Fund to gift appreciated securities from a brokerage account – allows you to take a tax deduction and also avoid paying capital gains tax

  • Consider utilizing the Qualified Charitable Distribution (QCD) if you’re over the age of 70 ½ - allows you to gift funds directly to charity from your IRA

Investment Planning  

  • Review your allocation before year end to see if your mix between stocks and bonds is appropriate for your situation

  • Consider the asset location of your portfolio to potentially improve after-tax returns

  • Consider proactive planning such as tax-loss harvesting

As mentioned during the webinar, don’t forget to check out our Year-End Planning Opportunities guide in the resources portion of our website.  This guide acts as a helpful tool to help organize your financial picture before year and also provides further insight on retirement planning strategies to consider as well as a detailed overview of proposed tax reform.  Please feel free to contact your financial planning team at The Center with any questions or concerns, we’re here to help.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

This information is being provided for educational purposes only and is not intended as specific tax or investment advice. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

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Required Minimum Distribution Update

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Contributed by: Timothy Wyman, CFP®, JD Tim Wyman

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As tough as it is to admit, sometimes after practicing for 26 years I take things for granted. I should know better!  One such instance was working with one of the firm’s long term clients facing their first Required Minimum Distribution (“RMD”) from her IRA. As our client shared, “Since neither of us have experienced this life experience before, we know nothing about it.”  The good news is that The Center has been helping clients satisfy their RMD requirement and integrating it into their financial planning for years. What I forgot was that what may appear a routine exercise for us as professionals may not be for folks experiencing a RMD for the first time.

Center partner Laurie Renchik, CFP®, provides a quick outline of the rules in the following blog post: http://www.centerfinplan.com/money-centered/2013/2/7/the-magic-age-of-70-and-your-required-minimum-distributions.html?rq=rmd

While the rules may be considered somewhat straight forward – as usual there are many nuances. More importantly, sometimes the issue is simply how one actually takes the money.

Need the money for living expenses? We can transfer to your bank account or send a check. This can be done monthly, quarterly, or even as a lump sum during the year.

Don’t need the money? We can transfer the after tax amount to a taxable investment account and reinvest for future use. Remember, the tax man wants to get paid (via income tax withholding) before the transfer.

For example, Mary’s RMD amount is $20,000 and she is in the 25% marginal income tax bracket for federal income tax purposes.  We would request a gross distribution of $20,000 and send the IRS $5,000 for income tax withholding and the $15,000 balance could be reinvested in Mary’s taxable investment account.  I should note, the State of Michigan in Mary’s case wants their share and therefore we would withhold another 4.25% in most cases.

Additionally, while not necessarily a RMD rule, those over 70.5 and subject to a RMD may also consider how a Qualified Charitable Distribution (“QCD”) might be beneficial.  My colleague Nick Defenthaler provides a great recap here:

 http://www.centerfinplan.com/money-centered/2017/9/8/qualified-charitable-distributions-giving-money-while-saving-it-1?rq=rmd

The ease of giving and potential income tax benefits makes this an attractive option for many.    While not a substitute for professional assistance, please find a summary of the major provisions for your consideration:

Donor Benefits of the QCD include:

  • Convenience: An easy and simple way to support your favorite cause

  • Lowers Taxable Income:  The donor does not have to include the qualified charitable distribution as taxable income – whether the donor uses the standard deduction or itemizes deductions.

  • Ability to make larger deductible gifts:  A donor is not restricted to 50% of adjusted gross income by using an IRA for charitable gifts.  Therefore, a donor may make larger charitable gifts.

  • Income tax savings:  The donor may save substantial income taxes not otherwise available due to deduction floors and phase-outs at higher income levels.   

You have worked to save money for the future and tax deferral via IRA’s for most has been an important component. At age 70.5 IRS regulations dictate that a minimum amount must be withdrawn whether you actually need the money for living expenses. The Center is here to assist you in your RMD planning and to ensure that they are integrated into your overall retirement planning.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc.® and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

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Qualified Charitable Distributions: Giving Money While Saving It

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Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

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Late last year, the Qualified Charitable Distribution (QCD) from IRAs for those over the age of 70 ½ was permanently extended through the Protecting Americans from Tax Hikes (PATH) Act of 2015. Previously, the QCD was constantly being renewed at the 11th hour in late December, making it extremely difficult for clients and financial planners to properly plan throughout the year. If you’re over the age of 70 ½ and give to charity each year, the QCD could potentially make sense for you. 

QCD Refresher

The Qualified Charitable Distribution only applies if you’re at least 70 ½ years old. It essentially allows you to donate your entire Required Minimum Distribution (RMD) directly to a charity and avoid taxation on the dollars coming from your IRA. Normally, any distribution from an IRA is considered ordinary income from a tax perspective, however, by utilizing the QCD the distribution from the IRA is not considered taxable if the dollars go directly to a charity or 501(c)(3) organization.    

Let’s look at an example:

Sandy, let’s say, recently turned 70 ½ in July 2016 – this is the first year she has to take a Required Minimum Distribution (RMD) from her IRA which happens to be $25,000. Sandy is very charitably inclined and on average, gifts nearly $30,000/year to her church. Being that she does not really need the proceeds from her RMD, but has to take it out of her IRA this year, she can have the $25,000 directly transferred to her church either by check or electronic deposit. She would then avoid paying tax on the distribution. Since Sandy is in the 28% tax bracket, this will save her approximately $7,000 in federal taxes!

Rules to Consider

As with any strategy such as the QCD, there are rules and nuances that are important to keep in mind to ensure proper execution:

  • Only distributions from IRAs are permitted for the QCD. Simple and SEP IRAs must be “inactive.”

    • Employer plans such as a 401k, 403b, 457 do not allow for the QCD.

    • The QCD is permitted within a Roth IRA but this would not make sense from a tax perspective being that Roth IRA withdrawals are tax-free by age 70 ½. *

  • Must be 70 ½ at the time the QCD is processed.

  • The funds from the QCD must go directly to the charity – the funds cannot go to you as the client first and then out to the charity.

  • The most you can give to charity through the QCD in a given year is $100,000, even if this figure exceeds the actual amount of your RMD.

The QCD can be a powerful way to achieve one’s philanthropic goals while also being tax-efficient. The amount of money saved from being intentional with how you gift funds to charity can potentially keep more money in your pocket, which ultimately means there’s more to give to the organizations you are passionate about. Later this month, we will be hosting an educational webinar on philanthropic giving – click here to learn more and register, we hope to “see” you there!

Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Nick Defenthaler and are not necessarily those of Raymond James. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

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