Lifetime Gifting

hand holding watering can watering money tree

Retiree’s have benefited from over a decade of an incredible equity market run since the depths of the financial crisis. By and large, “sustainable” portfolio withdrawal rates from 4-6% have held up without depleting original retirement balances. We frequently see individuals who are in or past their first decade of retirement have significantly more in assets than they started with at retirement, even after spending. To say this is a great result of course is an understatement.

We often get the question, “What should I do with it?” The answer of course depends on your goals. However, we often recommend clients to consider lifetime gifting. A lifetime gift is just that, a gift to your child, grandchild, other relative or charity during your life. While of course these funds can be bequeathed to various beneficiaries at death, watching the impact these funds can have on someone’s life can be quite meaningful to you. Watching those dollars work today can be a real reward.

There are also the financial planning considerations. “Qualified” or retirement monies that are in tax-deferred accounts likely must be depleted by the next generation within a 10-year window. This condenses the time for funds to be distributed and can have a significant tax impact on the recipient. Of course, this could result in more dollars than necessary being paid in taxes. Starting the gifting during your life may mean lower taxes paid by you, and more dollars being kept in your family. For charities, considering a QCD, or qualified charitable distribution is low hanging fruit to get the most bang for your buck. You don’t have to itemize your deductions, and funds are directly distributed from your IRA to the charity of your choice. This will satisfy all or a portion of your RMD if you are over 72. This may even reduce the taxes you pay on your Social Security benefits.

For 2022, you can gift up to $16,000 per person or $32,000 per couple to an individual without incurring any gift tax. Qualified Charitable Distributions are limited to $100,000 and are only allowable for those over age 70.5. Both strategies can make quite a bit of financial planning sense, but also give you the opportunity to watch the impact your dollars can make to those people and causes that matter to you most. You should speak to your financial professional and or tax advisor on the best way to start a gifting plan to those you love or to a charity of your choice.


The views are those of Robert Jeter, CFP®, CRPC and Eric Johnston, CFP® and should not be construed as specific investment advice. Investors cannot directly invest in indices. Past performance is not a guarantee of future results.

Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. No system or financial planning strategy can guarantee future results.

You should consult your tax advisor for specific advice on your situation and whether the strategies above may make sense for you.

Investment Advisor Representative offering securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity.