Retirement and Charitable Giving

Retirement and Charitable Giving

by A. Scott White, CFP®, ChFC®, CLU®
President, Scott White Advisors

In financial terms, we refer to retirement as the ‘asset distribution phase’ of life—the time when the assets you’ve worked hard to create can be used to fund the post-career life you desire. For many of my clients, their retirement vision includes maintaining a pre-retirement lifestyle, enjoying favorite activities, spending more time with friends and loved ones, traveling, and volunteering to support favorite charitable organizations and causes.

Realizing your retirement vision requires careful planning and monitoring during your working years—and creating an Investment Policy Statement to help you achieve your vision. The process
for developing an IPS follows a similar path to that of financial planning: assessing your financial condition; setting goals; developing a strategy designed to meet those goals; implementing the strategy; and regularly reviewing the results and adjusting as needed. As you approach retirement, it’s important to revisit your IPS and adjust it as necessary.

After the IPS review, some of my clients who are approaching retirement find that they are not in need of all the funds accumulated in their retirement accounts and want to make charitable contributions with some of their funds. That’s when we discuss whether they can donate retirement assets—and if there are any tax advantages for doing so. While it is possible to donate retirement assets, including IRAs, 401(k)s and 403(b)s by cashing them out, paying the income tax attributable to the distribution and then contributing the proceeds to charity, in most cases there is little to no tax benefit associated with this type of donation.

In 2015 the Protecting Americans from Tax Hikes Act (PATH) made permanent many of the tax extenders which needed to be approved every year by our Congress and President. One of the most popular provisions is the qualified charitable distribution rule (QCD) that allows individuals over age 70½ to give up to $100,000 per year directly to a public charity from their IRA, with some limitations.

There can be significant tax advantages to donating retirement assets to charity as part of an estate plan. When done properly, charitable donations of retirement assets can minimize the amount of income taxes imposed on both your individual heirs and your estate. Retirement plan benefits are only payable to the employee or account holder who earned them, with a few exceptions for spouses or survivors.

If you want to support charities without dipping into your cash reserves, think about donating appreciated assets such as stocks or real estate. This strategy can eliminate capital gains taxes you would incur by selling them separately before donating the cash, therefore ensuring that your intended charity receives the full value of the asset. In this case donors are able to give up to 20% more because capital gains taxes are minimized. Also, by donating these types of assets, you can take an income tax deduction in the amount of the full fair-market value, up to 30% of your AGI.

Retirement is one of the biggest events of one’s life, opening the door to the vision you’ve created for the rest of your life. It’s also a good time to review your philanthropic desires and support charities you care about with a gift made during your lifetime or at death. To discuss your retirement vision and questions you have about achieving it, please contact me.


Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.
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.
Raymond James is not affiliated with the above organizations and/or charitable causes. Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes. To learn more about the potential risks and benefits of Donor Advised Funds, please contact us.