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Monday, March 18, 2013
Monday, March 11, 2013
Do You Have An Estate Plan?
As
copywriters well know, when you reference learning in a headline, readers’
interest tends to perk up. Add a mention to the “rich and famous,” and you really
generate interest. So, “Lessons
of the Rich and Famous . . . in Death” about estate planning caught my
attention.
Given so many stories of family feuds and financial disasters, it’s surprising that most Americans don’t have an estate plan. In fact, the article notes that many of our past Presidents died without estate plans, including Presidents Lincoln, Johnson, Grant and Garfield. Notably, President Lincoln, although he was a practicing attorney, left such a financial mess that it took two years to settle his estate.
The article also addresses perhaps the most famous case of a celebrity dying intestate. When the handwritten will of Howard Hughes was determined to be forged, it took 34 years to divide Hughes’ $2.5 billion estate among 22 cousins. And then there was James Brown, who tried to leave his $100 million fortune to a special trust set up to benefit needy children. However, because he never addressed the plan with his family or updated his will after his fourth marriage, much of his wealth was lost in legal battles.
The article closes by praising Elvis for leaving the building with a solid estate plan. Elvis Presley had not only a will, but testamentary trusts to provide for his family long after his passing. You can improve on The King’s handling of his affairs by having the appropriate documents drafted – and discussing your wishes with your heirs.
As a side note to our peak into the lives of the rich and famous, I read recently where Mick Jagger’s former financial advisor, Prince Rupert Loewenstein, has written a book, A Prince Among Stones. Apparently, Loewenstein, who is credited for having a hand at keeping the Rolling Stones together for 40 years, divulges more of Mick Jagger’s personal finances than the Stones’ front man likes. Commented Jagger to The Mail Online, “Call me old fashioned, but I don’t think your ex-bank manager should be discussing your financial dealings and personal information in public.” The book hits the shelves in a few weeks.
Given so many stories of family feuds and financial disasters, it’s surprising that most Americans don’t have an estate plan. In fact, the article notes that many of our past Presidents died without estate plans, including Presidents Lincoln, Johnson, Grant and Garfield. Notably, President Lincoln, although he was a practicing attorney, left such a financial mess that it took two years to settle his estate.
The article also addresses perhaps the most famous case of a celebrity dying intestate. When the handwritten will of Howard Hughes was determined to be forged, it took 34 years to divide Hughes’ $2.5 billion estate among 22 cousins. And then there was James Brown, who tried to leave his $100 million fortune to a special trust set up to benefit needy children. However, because he never addressed the plan with his family or updated his will after his fourth marriage, much of his wealth was lost in legal battles.
The article closes by praising Elvis for leaving the building with a solid estate plan. Elvis Presley had not only a will, but testamentary trusts to provide for his family long after his passing. You can improve on The King’s handling of his affairs by having the appropriate documents drafted – and discussing your wishes with your heirs.
As a side note to our peak into the lives of the rich and famous, I read recently where Mick Jagger’s former financial advisor, Prince Rupert Loewenstein, has written a book, A Prince Among Stones. Apparently, Loewenstein, who is credited for having a hand at keeping the Rolling Stones together for 40 years, divulges more of Mick Jagger’s personal finances than the Stones’ front man likes. Commented Jagger to The Mail Online, “Call me old fashioned, but I don’t think your ex-bank manager should be discussing your financial dealings and personal information in public.” The book hits the shelves in a few weeks.
Monday, March 4, 2013
Does the Pope Need Financial Advice?
Saving for retirement is hard work – and that’s why it helps to have a good
laugh about it every once in a while. A few weeks ago “Saturday Night Live”
capitalized on Pope Benedict XVI’s resignation from the Vatican with a commercial for “Papal Securities,” the ultimate niche market firm dedicated to only serving
popes.
Pope Benedict is the only living pope to have abdicated his position, so it makes the question from SNL’s .Jason Sudeikis relevant:“What will you do when you retire? What will you do after you’re pope?”
Luckily, the Pope has a financial plan, and declares, “Papal Securities made sure my future was bright.”
Pope Benedict is the only living pope to have abdicated his position, so it makes the question from SNL’s .Jason Sudeikis relevant:“What will you do when you retire? What will you do after you’re pope?”
Luckily, the Pope has a financial plan, and declares, “Papal Securities made sure my future was bright.”
This skit reminded me of another SNL skit
I enjoyed years ago, which hit on one of my favorite topics: How investors cannot trust big brokerage firms
to act in their best interests.
Have a quick laugh at
these skits, and know that we take planning for your retirement very seriously.
One of My Favorite Days
Several years ago one of my sisters sent me the following poem. It meant a lot to me, and I wanted to share it with you today:
We all love Christmas. Halloween is scary sweet.
I'm thankful for Thanksgiving, boy how we eat!
Then there's our birthday which is really fun.
New Year's Eve is festive but we're a little tired come January One.
Easter is delightful! Fourth of July fireworks are great!
There is St. Patrick's, Presidents, Valentines, Veterans, Labor,
Columbus, Flag, Father's, Mother's, Martin Luther King, . . .
How do we keep track of all of these darn dates?
When I look at my one year calendar,
March Fourth is one of my favorite days.
Nothing much happened in history.
It's just what the day has to say!
When you have problems, March Forth!
When things don't work out, March Forth!
When bad things happen, March Forth!
When you lose, March Forth!
When anything can happen, March Forth says it all.
When something does happen,
Get up, Brush off, and March Forth,
Because we're all bound to fall.
--Anders Rasmussen
One of My Favorite Days
(March Fourth)
We all love Christmas. Halloween is scary sweet.
I'm thankful for Thanksgiving, boy how we eat!
Then there's our birthday which is really fun.
New Year's Eve is festive but we're a little tired come January One.
Easter is delightful! Fourth of July fireworks are great!
There is St. Patrick's, Presidents, Valentines, Veterans, Labor,
Columbus, Flag, Father's, Mother's, Martin Luther King, . . .
How do we keep track of all of these darn dates?
When I look at my one year calendar,
March Fourth is one of my favorite days.
Nothing much happened in history.
It's just what the day has to say!
When you have problems, March Forth!
When things don't work out, March Forth!
When bad things happen, March Forth!
When you lose, March Forth!
When anything can happen, March Forth says it all.
When something does happen,
Get up, Brush off, and March Forth,
Because we're all bound to fall.
--Anders Rasmussen
Monday, February 25, 2013
Did You Resolve to be More Productive in 2013?
After a distinguished career in financial services and public service, Robert Pozen, is now a senior lecturer at Harvard Business School. In his new book, Extreme Productivity: Boost Your Results, Reduce Your Hours, Pozen shares insights on a range topics, from how to sleep on an overnight business flight to how to effectively deal with employees’ mistakes.
However, at the heart of this businessperson’s handbook is Pozen’s belief that it “takes a lot more than organizing your schedule to be productive.” Explained Pozen in a Harvard Business School interview, “I wanted to discuss skills that have been critical in my own career. Communication is one—reading, writing, and speaking. Another is how you operate within your organization and deal with both those above you and those who report to you. I also wanted people to think about how they are managing their careers in the evolving context of their own professional and personal lives.”
The book offers a number of practical takeaways. Pozen suggests improving business meetings by allocating adequate time in advance for everyone to prepare for a thoughtful discussion and limiting the meeting to an hour, or 90 minutes at the most. He notes, “There are tremendous diminishing returns in lengthier meetings. When you only have an hour, you don't waste time on nonproductive tangents.” He also advises that all meetings should have an effective close, summing up the to-dos, and who's going to do them. He notes, “Senior executives tend to think that they can accomplish this by just telling people what to do. But there's a big difference between assigning a task to be completed by next Tuesday vs. introducing a challenge, getting buy-in on addressing that challenge, and having everyone come together on a way it can get done by a mutually agreed deadline.”
Pozen also offers his advice on how to manage work obligations when they pose conflicts with family life. “Many managers insist that their jobs routinely require them to stay late at the office, but when you press them, they admit that isn't true,” he observed in the Harvard Business School interview. “Some occasional emergencies need to take precedence over everything else, but unless you work in a hospital, those situations are rare. Even if you have to catch up with work after dinner, take a couple of hours every day to connect with the people in your life who should matter most.”
Now, that’s food for thought.
However, at the heart of this businessperson’s handbook is Pozen’s belief that it “takes a lot more than organizing your schedule to be productive.” Explained Pozen in a Harvard Business School interview, “I wanted to discuss skills that have been critical in my own career. Communication is one—reading, writing, and speaking. Another is how you operate within your organization and deal with both those above you and those who report to you. I also wanted people to think about how they are managing their careers in the evolving context of their own professional and personal lives.”
The book offers a number of practical takeaways. Pozen suggests improving business meetings by allocating adequate time in advance for everyone to prepare for a thoughtful discussion and limiting the meeting to an hour, or 90 minutes at the most. He notes, “There are tremendous diminishing returns in lengthier meetings. When you only have an hour, you don't waste time on nonproductive tangents.” He also advises that all meetings should have an effective close, summing up the to-dos, and who's going to do them. He notes, “Senior executives tend to think that they can accomplish this by just telling people what to do. But there's a big difference between assigning a task to be completed by next Tuesday vs. introducing a challenge, getting buy-in on addressing that challenge, and having everyone come together on a way it can get done by a mutually agreed deadline.”
Pozen also offers his advice on how to manage work obligations when they pose conflicts with family life. “Many managers insist that their jobs routinely require them to stay late at the office, but when you press them, they admit that isn't true,” he observed in the Harvard Business School interview. “Some occasional emergencies need to take precedence over everything else, but unless you work in a hospital, those situations are rare. Even if you have to catch up with work after dinner, take a couple of hours every day to connect with the people in your life who should matter most.”
Now, that’s food for thought.
Monday, February 18, 2013
Boutique Wealth Management Firms Are Tops
Investors with at least $5 million in assets and minimum annual income of $200,000 prefer smaller boutiques over the large Wall Street firms. So says a recent survey by the New York-based Luxury Institute.
While the survey measured factors from brand quality and exclusivity to the firms’ ability to deliver special client experiences, Luxury Institute CEO Milton Pedraza said “reputations for honesty and superior client service” made the smaller boutique firms stand out for investors surveyed.
That’s our focus at Bernhardt Wealth Management. We understand the specific needs of high-net-worth clients and, as a boutique wealth management firm, deliver a level and breadth of service that far surpasses a large brokerage firm’s cookie-cutter approach to wealth management. Our holistic approach integrates portfolio construction, tax planning risk management, estate planning and philanthropic planning. And we offer expert, unbiased advice to help our clients make informed decisions about their money. In all instances, we put our clients’ best interests first and no conflicts of interest ever cloud the advisory relationship. With our help to define and achieve their financial goals, our clients gain peace of mind and the freedom to focus on what is most important in their life.
Interestingly, it seems the some of the largest broker dealers are catching on that their myopic client service model is broken. I read recently where Wells Fargo launched Abbot Downing, a wealth management firm that will merge with Wells Fargo Family Wealth and their legacy wealth management business to try to compete with boutique wealth management firms.
The catch, however, is that you need to have $50 million in assets to qualify for this model that Wells Fargo celebrates as having “greater capabilities” than their other wealth management services. At Bernhardt Wealth Management, we can certainly manage your $50 million, but you don’t need to have $50 million to qualify for our comprehensive, holistic, top-of-the-line wealth management services!
While the survey measured factors from brand quality and exclusivity to the firms’ ability to deliver special client experiences, Luxury Institute CEO Milton Pedraza said “reputations for honesty and superior client service” made the smaller boutique firms stand out for investors surveyed.
That’s our focus at Bernhardt Wealth Management. We understand the specific needs of high-net-worth clients and, as a boutique wealth management firm, deliver a level and breadth of service that far surpasses a large brokerage firm’s cookie-cutter approach to wealth management. Our holistic approach integrates portfolio construction, tax planning risk management, estate planning and philanthropic planning. And we offer expert, unbiased advice to help our clients make informed decisions about their money. In all instances, we put our clients’ best interests first and no conflicts of interest ever cloud the advisory relationship. With our help to define and achieve their financial goals, our clients gain peace of mind and the freedom to focus on what is most important in their life.
Interestingly, it seems the some of the largest broker dealers are catching on that their myopic client service model is broken. I read recently where Wells Fargo launched Abbot Downing, a wealth management firm that will merge with Wells Fargo Family Wealth and their legacy wealth management business to try to compete with boutique wealth management firms.
The catch, however, is that you need to have $50 million in assets to qualify for this model that Wells Fargo celebrates as having “greater capabilities” than their other wealth management services. At Bernhardt Wealth Management, we can certainly manage your $50 million, but you don’t need to have $50 million to qualify for our comprehensive, holistic, top-of-the-line wealth management services!
Monday, February 11, 2013
EBRI Reports on the State of 401(k) Plans
They’ve only been part of the investment landscape for three decades, but 401(k) plans have grown to be the most widespread private-sector employer-sponsored retirement plan in the United States. In 2011, an estimated 51 million American workers were active 401(k) plan participants – and the $3.2 trillion in 401(k) plan assets represented 18% of all retirement assets.
If you’ve ever wondered how your 401(k) investment decisions compare to other investors’ approaches, the Employee Benefit Research Institute (EBRI) provides all the detail you need in the recently published 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2011. It’s a report EBRI publishes each year in collaboration with the Investment Company Institute (ICI).
On average, at year-end 2011, 61 percent of 401(k) participants’ assets was invested in equity securities, including equity funds, the equity portion of balanced funds, and company stock. Fixed-income securities, including stable-value investments and bond and money funds accounted for 34 percent.
As in previous years, participants’ asset allocation varied considerably with age. Younger participants tended to favor equity funds and balanced funds, while older participants were invested more heavily in fixed-income securities such as bond funds, GICs and other stable-value funds, or money funds. Among participants in their 20s, the average allocation to equity and balanced funds was 75 percent of assets, compared with 50 percent of assets among participants in their 60s.
Younger participants also favored target-date funds that pursue a long-term investment strategy using a mix of asset classes that follow a predetermined reallocation, typically shifting in focus from growth to income over time. At year-end 2011,13 percent of 401(k) assets in the database was invested in target-date funds. Participants in their 20s had 31 percent of their 401(k) assets invested in target-date funds, compared to just 11 percent for participants in their 60s.
Balanced funds have also become increasingly popular with younger investors. At year-end 2011, 51 percent of the account balances of recently hired participants in their 20s was invested in balanced funds, compared with 44 percent in 2010, and just 7 percent in 1998.
In another ongoing trend, company stock continued to represent a small plan allocation, remaining at an average of 8 percent in 2011, across all age groups. This share has fallen by more than half since 1999.
To make the most of your 401(k), contribute enough to secure your company’s match and increase your savings as your salary increases. Also, take advantage of catch-up provisions if you are over age 50 and, if you change jobs, rollover your account.
If you’ve ever wondered how your 401(k) investment decisions compare to other investors’ approaches, the Employee Benefit Research Institute (EBRI) provides all the detail you need in the recently published 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2011. It’s a report EBRI publishes each year in collaboration with the Investment Company Institute (ICI).
On average, at year-end 2011, 61 percent of 401(k) participants’ assets was invested in equity securities, including equity funds, the equity portion of balanced funds, and company stock. Fixed-income securities, including stable-value investments and bond and money funds accounted for 34 percent.
As in previous years, participants’ asset allocation varied considerably with age. Younger participants tended to favor equity funds and balanced funds, while older participants were invested more heavily in fixed-income securities such as bond funds, GICs and other stable-value funds, or money funds. Among participants in their 20s, the average allocation to equity and balanced funds was 75 percent of assets, compared with 50 percent of assets among participants in their 60s.
Younger participants also favored target-date funds that pursue a long-term investment strategy using a mix of asset classes that follow a predetermined reallocation, typically shifting in focus from growth to income over time. At year-end 2011,13 percent of 401(k) assets in the database was invested in target-date funds. Participants in their 20s had 31 percent of their 401(k) assets invested in target-date funds, compared to just 11 percent for participants in their 60s.
Balanced funds have also become increasingly popular with younger investors. At year-end 2011, 51 percent of the account balances of recently hired participants in their 20s was invested in balanced funds, compared with 44 percent in 2010, and just 7 percent in 1998.
In another ongoing trend, company stock continued to represent a small plan allocation, remaining at an average of 8 percent in 2011, across all age groups. This share has fallen by more than half since 1999.
To make the most of your 401(k), contribute enough to secure your company’s match and increase your savings as your salary increases. Also, take advantage of catch-up provisions if you are over age 50 and, if you change jobs, rollover your account.
Monday, February 4, 2013
Is Uncle Sam's Debt Higher Than We Thought?
In A Proper Accounting: The Real Cost of Government Loans and Credit Guarantees, the editors of the online newsletter Knowledge@Wharton point out that while our attention has been focused like a laser beam on the U.S. government’s enormous debt and the danger of falling off the Fiscal Cliff, we’ve ignored the massive costs and risks embedded in the government’s lending programs.
The article notes that “flaws in the way the government accounts for its loans and credit guarantees” underestimate the costs for student loans and other credit programs totaling more than $2.5 trillion, plus more than $5 trillion in mortgages backed by the federally owned companies Fannie Mae and Freddie Mac. According to the Financial Economists Roundtable (FER), a group administered by the Wharton Financial Institutions Center, if the government used accounting methods accepted by most businesses, our budget deficit would be even larger.
Said Deborah J. Lucas, finance professor at MIT's Sloan School of Management and FER member, “The federal government is the world's largest financial institution, but policymakers and [government] managers are handicapped by an accounting system that is seriously deficient. The accounting standards that the government sets for private financial institutions require far greater transparency than the rules that it imposes on itself.”
According to the FER, the 2008 collapse of Fannie Mae and Freddie Mac, private companies that operated as government-sponsored enterprises, is a “recent and costly example where the government treated its implicit loan guarantees as having no cost.” When the federal government stepped in and took over Fannie and Freddie, the price tag for taxpayers was more than $120 billion.
The roundtable insists that government accounting practices create the “budgetary illusion that government credit programs reduce the government deficit.” They point to a group of lending programs that includes student loans and mortgages guaranteed by the Federal Housing Administration that the Congressional Budget Office projects to reduce the federal deficit by about $45 billion in 2013, while an accurate accounting would show them likely to cost $11 billion.
Imagine if you ran your household finances like that? The article concludes with some good news. H.R. 3581 addresses necessary accounting adjustments has passed in the House, and awaits action in the Senate.
The article notes that “flaws in the way the government accounts for its loans and credit guarantees” underestimate the costs for student loans and other credit programs totaling more than $2.5 trillion, plus more than $5 trillion in mortgages backed by the federally owned companies Fannie Mae and Freddie Mac. According to the Financial Economists Roundtable (FER), a group administered by the Wharton Financial Institutions Center, if the government used accounting methods accepted by most businesses, our budget deficit would be even larger.
Said Deborah J. Lucas, finance professor at MIT's Sloan School of Management and FER member, “The federal government is the world's largest financial institution, but policymakers and [government] managers are handicapped by an accounting system that is seriously deficient. The accounting standards that the government sets for private financial institutions require far greater transparency than the rules that it imposes on itself.”
According to the FER, the 2008 collapse of Fannie Mae and Freddie Mac, private companies that operated as government-sponsored enterprises, is a “recent and costly example where the government treated its implicit loan guarantees as having no cost.” When the federal government stepped in and took over Fannie and Freddie, the price tag for taxpayers was more than $120 billion.
The roundtable insists that government accounting practices create the “budgetary illusion that government credit programs reduce the government deficit.” They point to a group of lending programs that includes student loans and mortgages guaranteed by the Federal Housing Administration that the Congressional Budget Office projects to reduce the federal deficit by about $45 billion in 2013, while an accurate accounting would show them likely to cost $11 billion.
Imagine if you ran your household finances like that? The article concludes with some good news. H.R. 3581 addresses necessary accounting adjustments has passed in the House, and awaits action in the Senate.
Monday, January 28, 2013
A Consultative Financial Advisor
There are a variety of characteristics a successful client-advisor relationship should have. Chief among them is that the relationship must be consultative. In my practice, that involves much more than simply working together with clients in an open and honest partnership to meet their goals. Importantly, we also work hand-in-hand with our clients’ estate planning attorneys, accountants and other financial professionals. This is our expansive professional network--a talented team of trusted advisors who offer specific expertise and objective counsel when necessary.
Notably, our consultative approach isn’t limited to professionals. Although many times one spouse functions as the point person when it comes to finances, it’s imperative that both partners understand and participate in the management of the family finances. In fact, many of our clients broaden their family’s involvement by bringing their children into the planning process. Even very young children can learn something about managing the household finances, and sharing the estate planning process with adult children can be especially fulfilling.
While there’s no question that in today’s challenging market you may require the expertise and counsel of a range of financial professionals, it’s crucial that when you assemble such a team, you designate a quarterback or your personal chief financial officer. In fact, recent research from State Street Global Advisors and the Wharton School at the University of Pennsylvania found that many investors who work with multiple financial advisors without a lead advisor shoulder additional portfolio risk.
How so? Think about it. Without a consultative quarterback to foster communication and coordinate your financial plan, multiple advisors could cloud your financial picture. For example, without communication between advisors, overlapping exposures could create an unintentional overexposure to a single stock or asset class that increases your overall portfolio risk. Or, if you worked with two advisors and one underweighted small cap, while the other overweighted the asset class, you’d have an unintended market neutral exposure. Additionally, over time, your portfolio would be prone to style drift, or a critical need to rebalance might go unmet.
If you work with multiple financial professionals, we recommend designating someone like us as your quarterback or personal chief financial officer.
(Note: For a discussion of the six core characteristics--Six Cs--an advisor should have, read What Makes a Great Financial Advisor? and the Six Cs blogs on this topic.)
Notably, our consultative approach isn’t limited to professionals. Although many times one spouse functions as the point person when it comes to finances, it’s imperative that both partners understand and participate in the management of the family finances. In fact, many of our clients broaden their family’s involvement by bringing their children into the planning process. Even very young children can learn something about managing the household finances, and sharing the estate planning process with adult children can be especially fulfilling.
While there’s no question that in today’s challenging market you may require the expertise and counsel of a range of financial professionals, it’s crucial that when you assemble such a team, you designate a quarterback or your personal chief financial officer. In fact, recent research from State Street Global Advisors and the Wharton School at the University of Pennsylvania found that many investors who work with multiple financial advisors without a lead advisor shoulder additional portfolio risk.
How so? Think about it. Without a consultative quarterback to foster communication and coordinate your financial plan, multiple advisors could cloud your financial picture. For example, without communication between advisors, overlapping exposures could create an unintentional overexposure to a single stock or asset class that increases your overall portfolio risk. Or, if you worked with two advisors and one underweighted small cap, while the other overweighted the asset class, you’d have an unintended market neutral exposure. Additionally, over time, your portfolio would be prone to style drift, or a critical need to rebalance might go unmet.
If you work with multiple financial professionals, we recommend designating someone like us as your quarterback or personal chief financial officer.
(Note: For a discussion of the six core characteristics--Six Cs--an advisor should have, read What Makes a Great Financial Advisor? and the Six Cs blogs on this topic.)
Monday, January 21, 2013
Good News for IRA Owners
On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 also known as the Fiscal Cliff Bill into law. While tax rates grabbed all the headlines, the bill also included some good news for charities – and for philanthropically inclined Individual Retirement Plan (IRA) owners.
You might remember the Qualified Charitable Distribution (QCD) provision. Well, this tax-free distribution of otherwise taxable dollars from your IRA to a qualified charitable organization is back! As established in 2011, individuals ages 70½ and older can give direct gifts up to $100,000 to qualified public charities from their Individual Retirement Accounts (IRAs) -- without paying taxes on the distribution.
In fact, the newly-dubbed “IRA Rollover provision” allows IRA gifts made between December 31, 2012 and February 1, 2013 to be counted for the 2012 tax year. It also permits people who made qualifying transfers from their IRAs to charities in December of 2012 to treat the transfers retroactively as eligible rollovers. Finally, it extends the IRA charitable rollover provision through December 31, 2013, when it will sunset.
And, yes, these gifts will count toward your Required Minimum Distribution (RMD).
Who benefits the most? Charities benefit, of course, but this strategy can make sense for both donors who itemize deductions and whose charitable contributions would be reduced by the percentage of income limitation or by the itemized deduction reduction. This is beneficial since the QCD is not included in the taxpayer's Adjusted Gross Income.
You might remember the Qualified Charitable Distribution (QCD) provision. Well, this tax-free distribution of otherwise taxable dollars from your IRA to a qualified charitable organization is back! As established in 2011, individuals ages 70½ and older can give direct gifts up to $100,000 to qualified public charities from their Individual Retirement Accounts (IRAs) -- without paying taxes on the distribution.
In fact, the newly-dubbed “IRA Rollover provision” allows IRA gifts made between December 31, 2012 and February 1, 2013 to be counted for the 2012 tax year. It also permits people who made qualifying transfers from their IRAs to charities in December of 2012 to treat the transfers retroactively as eligible rollovers. Finally, it extends the IRA charitable rollover provision through December 31, 2013, when it will sunset.
And, yes, these gifts will count toward your Required Minimum Distribution (RMD).
Who benefits the most? Charities benefit, of course, but this strategy can make sense for both donors who itemize deductions and whose charitable contributions would be reduced by the percentage of income limitation or by the itemized deduction reduction. This is beneficial since the QCD is not included in the taxpayer's Adjusted Gross Income.
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