The Tax Reform Act changed so many income tax provisions affecting individuals, corporations, pass-throughs, and specific industries that it is impossible to provide a brief and succinct overview of new planning opportunities. But here are two tax-planning acronyms to consider in 2019:
Post-Reform Philanthropy with a DAF
2019 will be a year to rethink charitable giving. “Bunching” – making several gifts in a single year rather than smaller annual gifts – is one widely recommended technique to address the changes to itemized deductions. Using a donor advised fund – a “DAF” – can take “bunching” to the next level. 100% of the deduction is immediately available, but gifts can be made over any time period and to almost any charity. Even more, the DAF sponsor assumes all ongoing reporting and disclosure obligations and costs. A DAF can be sponsored by your favorite church/temple/school/organization, or virtually any local community foundations.
Stretch Tax-Favored Retirement Funds with a GLI
This isn’t a Tax Reform item, but the uncertain tax landscape and recent market volatility make guaranteed lifetime income (“GLI”) options an option whose time may have come. A GLI, if available in your plan, turns a 401(k) or 403(b) into an old-fashioned pension plan, with income for life and market/mortality risk on the payer, rather than the retiree.
For more information, contact Kimberly I. McCarthy, Esq. VP, Chief Wealth Management Tax & Benefits Officer, at firstname.lastname@example.org.