Planning for Year-End 2024: Gifts and Distributions

With the end of the year quickly approaching, Woodmont has compiled some time-sensitive planning strategies for consideration. 

Planning for Year-End Gifts

• For charitable gifts, consider gifting low-basis, highly appreciated securities to receive a deduction for the donation's Fair Market Value (FMV) while avoiding the capital gains tax. If appropriate, the stock can be repurchased to maintain exposure while resetting a new, higher-cost basis.

• Consider opening a Donor Advised Fund (DAF) to facilitate gifts of highly appreciated stock. Individuals can receive a tax deduction equal to the FMV for the year of contribution to a DAF while retaining the flexibility to make grants to designated charities over multiple years or even decades.

• If you are at least 70 ½, you can take advantage of an additional method of gifting from your IRA directly to a charity, termed a "Qualified Charitable Distribution" (QCD). QCDs allow you to donate up to $105,000 per year, which can reduce your Adjusted Gross Income (AGI) and offset your Required Minimum Distribution (RMD). A lower AGI could qualify you for more tax credits or deductions and may lower future Medicare premiums, as these are calculated based on AGI from two years prior. Please contact your Woodmont team for assistance in making a QCD.

• The annual gifting exclusion for 2024 allows you to gift up to $18,000 per year (up from $17,000 in 2023) to an individual without counting toward your lifetime estate exemption. Couples can jointly give up to $36,000 to one individual. This is an excellent way to transfer cash or stock. Gifting to a 529 college savings plan allows for the ability to contribute five years' worth of annual gifts upfront. This is particularly effective if you anticipate having a taxable estate.

Caution: Donations related to the right to purchase athletic tickets are not tax deductible. Please consult your CPA if you plan to make a gift to an athletic institution.

Planning for Year-End Distributions

Beneficiaries of an inherited account post-2019:

• If you inherited a tax-deferred individual retirement account (IRA) after 2019, you may save on your total tax burden by spreading out the required distributions rather than taking a lump sum within 10 years. Please contact Woodmont if you want to understand your options for a post-2019 inherited IRA account.

Note: Certain beneficiaries of IRAs inherited after 2019 may be required to take annual RMDs within the 10-year withdrawal window. While the IRS has waived these requirements for 2021-2024, these beneficiaries must begin taking distributions in 2025.

Retirement account owners:

• If you turn 73 in 2024, you are required to take your RMD by April 1st, 2025. However, taking it by December 31st, 2024, can help you avoid the need to take two RMDs in 2025. 

• If you are still working and own less than 5% of your company, you may be able to defer the RMD from an employer-sponsored retirement plan (such as a 401(k)) until the year you retire.

• Please contact Woodmont if you want to change your IRA distribution tax withholding.

Lastly, please notify Woodmont if you will need additional funds to make a 4th quarter estimated tax payment due on January 15th, 2025.

We recognize this is a lot of information. We are available to answer your questions and assist in any way possible. Thank you. 


The Woodmont Team

November 6, 2024

_{This document contains general information only and is not intended to be relied upon as a forecast, research, investment advice, or a recommendation, offer, or solicitation to buy or sell any securities or to adopt any investment strategy. The information does not take into account any reader’s financial circumstances or risk tolerance. An assessment should be made as to whether the information is appropriate for you with regard to your objectives, financial situation, present and future needs.}

_{The opinions expressed are of the date of publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Woodmont to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to fruition. Any investments named within this material may not necessarily be held in any accounts managed by Woodmont. Reliance upon information in this material is at the sole discretion of the reader. Past performance is no guarantee of future results.}