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October Quarterly Newsletter - 2023

Highlights of this Special Edition Newsletter:

  • LVM's Year-End Financial Planning Checklist

  • Giving to Charity through CRT or CLTs

  • TD Ameritrade to Schwab Transition Reminders






LVM's Year-End Financial Planning Checklist


Required Minimum Distributions (RMDs)

Required Minimum Distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually, starting with the year that he or she reaches 73 (70 ½ if you reach 70 ½ before January 1, 2020). The RMD is calculated for each IRA or retirement plan account by dividing the prior December 31 balance by a life expectancy factor that the IRS publishes. LVM and most custodians encourage you to complete these distributions before December 1 to ensure distributions are made before year-end.


Qualified Charitable Distributions (QCDs)

IRA owners over the age 70 ½ are allowed to satisfy all or a portion (up to $100,000) of their RMD

with a direct transfer to a qualified charity. Unlike regular IRA withdrawals, QCDs are excluded

from your taxable income, which can lower overall taxes paid and may help you keep certain tax

credits. Managing your tax bracket may also help reduce future Medicare premiums. The December 1 distribution timeline also applies for QCDs. If you are writing checks directly from the IRA, they

must clear before year end.


Maximize Retirement Contributions

In 2023, you can contribute $22,500 to your 401k or other employer-sponsored retirement plan. An

extra $7,500 in “catch-up” contributions are allowed if you will be at least age 50 this year.

Even if you do not have an employer-sponsored plan, you may still be able to contribute up to

$6,500 ($7,500 if you’re 50 or older) to a traditional IRA. These rules also apply to

Oon-deductible IRA and Roth IRA contributions. “Backdoor” Roth contributions are also available for higher income earners if you are phased out from making direct contributions to a Roth IRA.

Self-employment plans allow higher contributions of up to $66,000 or 25% of your qualified income (whichever is less).


Tax Loss-Harvesting

Tax-loss harvesting is a strategy used to reduce overall capital gains taxes paid by selling

securities you hold at a loss. Tax losses can be used to offset gains you may have in the account

or gains from selling real estate or a business. Annually, you can use $3,000 of capital losses to

offset income, and you can carry forward any losses above and beyond the $3,000 for future use.


Other Items to Discuss with your Financial Advisor

College education savings ($10,000 contributions to 529 plans); Heath Savings Account (HSA) contributions ($3,850 per person plus $1,000 for 55 and older "catch-up" provision); making gift-tax exclusion gifts to non-charitable recipients (children, grandchildren, other family or friends) of up to $17,000/recipient ($34,000/recipient from a couple); review life insurance coverage and estate planning documents including Trusts, Wills, Health Care Proxy, and Financial Power of Attorney.


Giving to Charity Through CRT or CLTs

There are many ways to support your charities such as direct gifts of cash, appreciated securities, and Qualified Charitable Donations (QCD) from your IRA. Some lesser known and just as powerful financial planning tools for charitable giving are Charitable Remainder Trusts (CRT) and Charitable Lead Trusts (CLT). These Trusts offer donors an appealing blend of philanthropy and financial planning.


Charitable Remainder Trusts (CRT):

Donors can establish a CRT by transferring assets, such as cash, securities, or real estate, into a trust that pays them or their selected beneficiaries a fixed income for life or a specific term. At the term's end, the remaining assets are passed on to your chosen charity. Not only does this provide financial security to the donor and their beneficiaries, but it also ensures the sustainability of the charity. By choosing a charity as the beneficiary, donors can witness the immediate donor income benefits and leave a philanthropic legacy that continues to make a difference for generations to come.


Benefits of a CRT:

  1. Income Stream for Donors: Through CRTs, donors receive an income stream for a specified period, typically for the remainder of their lifetime or a set number of years.

  2. Immediate Donor Tax Benefits: Donors benefit from an immediate income tax deduction for the present value of the charitable remainder interest.

  3. Diversification and Avoidance of Capital Gains: If donors contribute appreciated assets, they can avoid immediate capital gains tax upon the sale of those assets within the CRT. This allows donors to diversify their investments while supporting a non-profit's mission.

  4. Philanthropic Legacy: After the trust term expires or upon the donor's passing, the remaining assets in the CRT are directed to the non-profit organization. This establishes a lasting philanthropic legacy.


Charitable Lead Trusts (CLT):

In a CLT, donors establish a trust that pays a fixed amount or a percentage of trust assets to the charity for a specified period. After this period ends, the remaining assets are typically passed on to heirs or other noncharitable beneficiaries, preserving wealth for future generations.

The beauty of a CLT is that it allows donors to reduce estate and gift taxes while ensuring the charity receives consistent support. It can be an excellent strategy for individuals who want to pass on their values and philanthropic spirit to their loved ones while making a substantial charitable impact during their lifetime.


Benefits of a CLT:

  1. Steady Income Stream to Charity: CLTs provide non-profits with a reliable income stream for a fixed period, typically a specified number of years. This income can be instrumental in funding ongoing programs and initiatives.

  2. Reduced Tax Liability for Beneficiaries: The income generated by the trust can reduce or eliminate the estate and gift taxes that would otherwise be incurred by beneficiaries, such as family members.

  3. Funding Growth for Non-Profits: As the assets in the trust generate income for the non-profit during the trust term, the principal remains intact and can appreciate, ensuring a growing source of funding.

  4. Legacy for Heirs: CLTs can serve as an attractive option for donors who want to support a non-profit while providing for their heirs. It allows donors to have a meaningful impact on causes they care about during their lifetime.

By considering a CRT or CLT, you amplify your support for your charity’s mission and secure your own financial future or that of your heirs. Continued dedication to your favorite charity serves as a cornerstone of their mission's success positively impacts the lives of those they serve.


Please consult with your financial advisor to explore these options in greater detail and determine which strategy aligns best with your personal goals and philanthropic aspirations.


TD Ameritrade to Schwab Transition Reminders

TD Ameritrade (TDA) client accounts transitioned to Schwab on September 5. These clients will receive two accounts statements for the month of September

  • A statement from TDA - likely showing a $0 balance because positions and cash moved to Schwab

  • A statement from Schwab displaying the full balance of the coverted accounts.

If you have set up set up automatic withdrawals for payment of bills, etc, you will need to contact the vendor to update instructions with Schwab account information and routing numbers.

Note: Checking must be set up on your account to be eligible for this type of transfer.

Contact your LVM Team if further information is required.


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