The Matching Grants Program through Medtronic was introduced on September 10, 2013. The program was designed to make charitable giving easy, convenient and meaningful for you, the employee or retiree. This philanthropic program matches dollar for dollar employee charitable donations, with the intent to mutually double the impact people make in the communities where they live and work.
This past year, Medtronic philanthropy would match $50,000, dollar for dollar, of your donations. For 2014 they have agreed to increase the match to $100,000 allowing you to make an even greater impact in your local community.
To make the most of this gifting program and to benefit you and your future gifting there are potential tax efficient ways to transfer your Medtronic stock. One way is to transfer appreciated stock to a Donor Advised Fund (DAF).
A Donor Advised Fund is an account that allows taxpayers to establish a charitable fund and receive tax benefits now with the ability to use the fund to meet future charitable giving goals. The taxpayer can avoid the gains on donated stock and use the full value of the donated stock as a deduction so long as the stock is in the DAF when it is liquidated. The donor can direct gifts to their favorite charities such as their church, association, schools and more. There is no minimum or maximum gift per year so the account can provide gifts for decades to come and allow their heirs to continue the legacy after the donor has passed.
The impact of a sale or merger cannot be answered with a guess or by rule of thumb of a 15% capital gain tax rate. The increased capital gain tax on large gains, the Medicare tax on investment income, the alternative minimum tax (AMT), reduction or elimination of personal exemptions and deductions caused by high income, and state income tax could result in tax liabilities exceeding 45% of the capital gains.
While every household is different, the combination of avoiding gains and the charitable deduction for high income earners could result in tax savings potentially as high as 80% or more of the value of the donated stock. The matching funds could double the gift and further reduce the net cost of a gift. Using this account in the future can provide further benefits when compared to using current income to make charitable gifts.
Time is running out!
Great care must be taken to generate the biggest tax break with your charitable contribution. It takes time to gather all of the data such as cost basis per lot. Holding your shares at a transfer agent such as Computershare could cause a delay in the transfer of the shares potentially up to a month. Waiting until the last minute could result in the loss of the planning opportunities as the shares need to be selected and postured for quick action. In addition, each household needs to determine their current and future charitable goals. The amount of the gift, the lot selection and the timing of the gift are critical.
FFP Wealth Management is one firm who can be your best ally in this decision making process.
FFP Wealth Management in Coon Rapids, Minnesota is a firm that has created the Tax SuperSheet™ to provide a simple and accurate way to illustrate the benefit derived from using complicated tax strategies. They are not broker’s whose intent is on selling products. They are a fee only money management and advisory firm with a fiduciary obligation to their clients. The Tax SuperSheet™ can illustrate the benefits of many financial planning strategies related to transactions, accumulation, debt elimination, and the transition to retirement or to those who are inheriting retirement plans.