One of the most beautiful expressions of community in the Bible is the fellowship of the believers as recorded in Acts 2: “They sold property and possessions to give to anyone who had need . . . . They broke bread in their homes and ate together with glad and sincere hearts, praising God and enjoying the favor of all the people. And the Lord added to their number daily those who were being saved” (Acts 2:45-47 NIV).
It strikes me that while these believers may or may not have had money to give, they sold what they had to help those in need. It doesn't matter if giving money isn't an option; God can use whatever we have to offer as long as we are willing to give it back to him.
As you consider your giving choices, I'd like to tell you about a variety of ways that you can give to the ministry of your choice.
Stocks and Bonds
A gift of your securities, including your stocks or bonds, is an easy way for you to make a gift. By making a gift of your appreciated securities, you can avoid paying capital gains tax that would otherwise be due if you sold these assets.
A gift of your securities, including your stocks or bonds, is an easy way for you to make a gift. By making a gift of your appreciated securities, you can avoid paying capital gains tax that would otherwise be due if you sold these assets.
Real Estate
A gift of your real property (such as your home, vacation property, vacant land, farmland or ranch or commercial property) can make a great gift. If you own appreciated real property, you can avoid paying capital gains tax by making a gift to us.
A gift of your real property (such as your home, vacation property, vacant land, farmland or ranch or commercial property) can make a great gift. If you own appreciated real property, you can avoid paying capital gains tax by making a gift to us.
Retirement Assets
A gift of your retirement assets, such as a gift from your IRA, 401k, 403b, pension or other tax deferred plan, is an excellent way to make a gift.
A gift of your retirement assets, such as a gift from your IRA, 401k, 403b, pension or other tax deferred plan, is an excellent way to make a gift.
Cash
A gift of cash is an easy way for you to make a gift. You will receive a charitable tax deduction that will provide you with savings on this year's tax return.
A gift of cash is an easy way for you to make a gift. You will receive a charitable tax deduction that will provide you with savings on this year's tax return.
Insurance
If your life insurance policy is no longer needed or will no longer benefit your survivors consider making a gift and help further our mission.
If your life insurance policy is no longer needed or will no longer benefit your survivors consider making a gift and help further our mission.
Thank you for your faithful giving to God's kingdom. Please let us know if we can help you facilitate giving to the ministry of your choice.| Blessings, Kenneth R. Roney, J.D. President |
P.S. For more information on how to use your resources to support the future of your favorite ministry, please reply to this e-mail or contact us by phone at 913.577.2983.
PERSONAL PLANNERIRA and 401(k) Designated Beneficiary Options
Each year, IRA and 401(k)s are subject to required minimum distributions (RMDs). Because the distributions start at just under 4% at age 71 and then slowly increase, many IRA and 401(k) plans will continue to grow. While the distributions will eventually become larger, most individuals will eventually pass away with an IRA or 401(k) balance reasonably close to the value of their plan at age 70.For this reason, the eventual distribution options for an IRA or 401(k) are quite important. For you and many other readers, the IRA or 401(k) may be the largest asset in your estate.
IRA and 401(k)s are transferred through a designated beneficiary that you select on your IRA or 401(k) custodian's form. The five common choices for designated beneficiary are the surviving spouse, children, charity, a trust for children or a trust for spouse and children.
1. Spouse as Beneficiary
The most common choice for a married couple is to select the surviving spouse as the designated beneficiary of an IRA or 401(k). When the IRA or 401(k) owner passes away, the surviving spouse has two choices with an IRA. He or she can receive payments under a one-life expectancy schedule or the IRA can be rolled over into his or her IRA.
Because the payments under the IRA schedule are frequently double the required payments with the rollover, nearly everyone rolls over the IRA into his or her own plan.
Assume that Harry Smith is the IRA owner and he passes away with Helen Smith as his designated beneficiary. Helen is age 68 when Harry passes away and rolls over the IRA into her plan.
When Helen reaches age 70½, she must start taking required minimum distributions. The minimum distribution must be taken by April 1 of the next year and is just under 4%. Her distribution will steadily increase as she becomes more senior.
Because Helen rolled over Harry's IRA into her IRA, she qualifies for the lower required minimum distributions under the uniform table. Helen often selects children or charities as designated beneficiaries.
If you are in a community property state and plan to leave your IRA to a trust or other beneficiary that is not your spouse, then it is essential to obtain a written consent from your spouse. In many states, attorneys who prepare estate plans will frequently use a waiver if the spouse is not the designated beneficiary of an IRA.
2. Children
For the surviving spouse, or in cases where there is a blended family, an IRA or 401(k), or any portion thereof, may be transferred to children.
There are two typical methods for designating children as beneficiaries. First, if each child receives a fraction of the plan, then each child may take distributions based on his or her own life expectancy.
Second, if there is a class designation with the IRA designated to a group of children or other heirs, then the age of the oldest beneficiary is used to determine the payouts.
It is best with several children to allocate a fractional share to each child. The opportunity to use the separate share method is quite important because of the payout calculation method. If a 60-year-old child is the beneficiary of an IRA, then he or she may take distributions over approximately 25 years. The distributions would start at age 61 at approximately 1/25th or 4%. Using a method of subtracting one from the denominator each year, the payments would steadily increase until the entire IRA is distributed at approximately age 86.
Does your child have to take the stretch payout? No, and frequently children do not. Many CPAs have indicated to the author that their clients have passed away and given the children an opportunity to stretch out the payouts.
However, this plan is often not successful. Approximately one-half of the children take the distribution early, even though that means paying the income tax earlier and losing the benefit of the tax-free growth for the life expectancy of the child. Parents who wish to encourage lifetime IRA distribution for the child may choose to use a testamentary trust to hold the IRA and payout over the child's life expectancy.
3. Charity
For the IRA or 401(k) owner, the qualified plan is a wonderful benefit and a very good asset. However, for children, the IRA or 401(k) is transferred with a large "you owe the IRS" tax bill attached (with the exception of a Roth IRA that is income tax free). For the vast majority of qualified plans, the child will pay income tax. Worse yet, the IRA or 401(k) distributions may even push the child into a higher tax bracket.
With the income tax on the IRA or 401(k) and no income tax paid on the home, land or stocks, for children the IRA or 401(k) is a less desirable asset. In fact, many will consider this a "bad asset" because of the income tax on most IRA payouts to children.
For this reason, children would far prefer to receive a home, land or stock because there is no income tax bill attached. The wise planning decision is to transfer the home, stocks or land (the good assets) to children and the IRA or 401(k) to charity (the bad assets due to the income tax bill to children).
Because charities are tax exempt, there is no payment of income tax or estate tax. The charity receives the full value tax free. By transferring the IRA or 401(k) to charity, it is possible to turn a bad asset into a good asset.
4. "Give It Twice" Trust
A very good plan for parents who have made lifetime gifts to charity is to combine a benefit to children with a future benefit to charity. This plan is called a "Give It Twice" trust.
A charitable remainder trust may receive the IRA or 401(k) with no payment of income tax. The full value of the IRA or 401(k) may be invested for a term of up to 20 years. Income earned is taxable and that new income is paid to children for the selected term of years. At the end of the selected term, the charity receives the trust principal.
For example, Mary Smith had an $800,000 estate. She lived in a home worth $200,000, had a CD for $200,000 and $400,000 in her IRA. Her IRA was substantial because when her husband Bill passed away, she rolled over his IRA into hers so the combined IRA is now half of her estate.
Mary has two children and decides to transfer the home and CDs to the children in equal shares when she passes away. They each receive $200,000 in value from the home and CDs with no income or estate tax.
After Mary passes away, the $400,000 IRA is transferred into a charitable remainder trust. It receives the IRA proceeds and invests the full $400,000. The trust pays 5%, which is divided between the two children for a term of 20 years. At the end of 20 years, the trust principal plus growth is given to charity.
Mary felt very pleased because she had achieved several goals. First, she had provided both principal and income to her children. This is a very good plan because some children will need a period of time to improve their money management skills. Second, she saved all of the income tax on the IRA. Because the unitrust is tax exempt, it receives the entire IRA tax free. The trust earns income for the children for a term of 20 years and is then transferred tax free to charity.
Because the trust benefits the children with more than $400,000 in income and then is given to charity, it truly may be called a "Give it Twice" trust.
5. Trust for Spouse and Children
For individuals with larger estates, it may make good sense to create a trust for surviving spouse and then a term of years for children. The IRA is transferred after the first person passes away into the trust for the surviving spouse. The trust will distribute income for his or her lifetime and then to the children for a term of 20 years. Following the life of spouse plus 20 years for the children, the trust remainder is distributed to charity.
This trust has several benefits. First, it may save very large income taxes because the trust is tax exempt. Second, the trust can be a "net plus makeup" plan that allows the spouse to choose to save taxes by taking reduced income during life. This will allow the IRA to continue to grow and build up the trust so there is greater income to the children.
This plan is an excellent way to benefit the surviving spouse, children and charity.
SAVVY LIVING
What to Consider When Choosing a Walk-in Bathtub
A walk-in bathtub is a great option for seniors with mobility problems who have trouble getting in and out of a traditional tub. With so many options available today, choosing one can be challenging. Here are a few tips that can help you make an informed decision.
Bathtub Basics
Walk-in bathtubs are specialty products that have a watertight, hinged door built into the side of the tub that provides a much lower threshold to step over (usually 3 to 7 inches) versus a standard tub that’s around 15 inches.
In addition to the low threshold, most walk-in tubs also have a built-in seat, grab bars, anti-slip floors and a handheld showerhead. Many higher-end models also offer therapeutic spa-like features that are great for seniors with arthritis and other ailments.
The kind of walk-in tub you choose will depend on the size and layout of your bathroom, your mother’s needs and preferences and budget. Prices for a good walk-in tub typically run between $3,000 and $10,000 installed. Here are some other things you should know.
Quality check: The best walk-in bathtubs on the market today are made in the USA. Also, make sure the company you choose has a lifetime “leak-proof” door seal warranty and lengthy warranties on both the tub and the operating system.
Tub size: While walk-in bathtubs vary in shape and size, most models have high-walls (three feet or higher), are 26 to 32 inches wide and will fit into the same 60-inch long space as your standard tub without having to reconfigure the room. If the walk-in tub doesn’t quite fit your old bathtub space, extension kits are available to ensure a good fit.
Door options: Most walk-in tubs have an inward opening door, but if your mother uses a wheelchair, an outward opening door may be a better option because they’re easier to enter and exit. Be aware that because these doors swing out they require more bathroom space.
One other style to consider is the “rising-wall” bathtub made by Kohler, which sits about two feet off the ground and has a side panel that slides up and down. These tubs can be entered from a seated position, which makes it a nice option for wheelchair users.
Tub type: Most companies offer several different types of walk-in tubs. The most basic type is a soaker tub. You can also get a therapeutic tub that offers either whirlpool water jets, bubble massage air jets or a combination of the two.
Fast fill and drain: One drawback to using a walk-in bathtub is that the bather must sit in the tub as it fills and drains, which can make for a chilly experience. To help with this, choose a tub that has fast-filling faucets and pump-assisted drainage systems, which significantly speeds up the process.
Where to shop: While there are many companies that make, sell and install walk-in bathtubs, some of the best in the industry are Safe Step (safesteptub.com, 800-346-6616), Premier (premiercarebathing.com, 800-934-7614), American Standard (americanstandard.com, 866-423-0800) and Jacuzzi (jacuzzi.com, 800-288-4002). Many big box retailers like Lowes, Home Depot and Sears sell walk-in bathtubs, too.
Unfortunately, Medicare does not cover walk-in bathtubs, but many companies offer financing with monthly payment plans.
To get started, contact a few companies who will send a local dealer to your home to assess your bathroom and give you product options and estimates for free.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
YOUR PLAN
Current Gifts
As is the case with many families, there are times each year when Jim and Sharon focus their attention on gift giving. For years, they have created a gift list that includes family members, friends and loved ones. Last year Jim and Sharon made an addition to their list and began including their favorite charity in their giving plan.Sharon: Years ago, I inherited stock from my grandmother. We held the stock for several years, but decided to sell a portion of it this year. The stock had gone way up in value, and our CPA informed us that we had a capital gain of nearly $120,000. We had always planned on making a charitable gift and the CPA reminded us that if we were to make a gift of this stock before the end of the calendar year, we would receive a charitable deduction on the gifted shares. This deduction will help offset the capital gains tax on the stock we sold.
Jim: We contacted our favorite charity to discuss the best way to make a gift. The gift planner noted some of the most common gifts - a gift by check or by transfer of bonds or real estate, to name a few. However, he also mentioned that it might be especially beneficial for us to think about giving some of our remaining appreciated stock.
Sharon: We were still holding $80,000 in the same highly appreciated stock and did not intend to sell, primarily because of the substantial capital gains tax we already faced. To sell any more would only increase our tax. The gift planner recommended that we consider an end-of-year gift that would help lower our taxes. He called this a Gift and Sale plan. It meant that part of our stock would be sold and the proceeds would come to us, and part would be gifted to our favorite charity.
Jim: That is what we decided to do. By giving the $80,000 in stock, we received two benefits. First, we avoided a large capital gains tax on that stock. And then, we received a charitable deduction. The deduction even offset the capital gains for our prior stock sale of $120,000. We are very pleased with the double benefits of our gift. And, we're delighted that we've been able to make a nice charitable contribution.
*Please note: The name and image above is representative of a typical donor and may or may not be an actual donor to our organization. Since your benefits may be different, you may want to click here to view a color example of your benefits.
WASHINGTON NEWS
U.S. Tax Receipts Up 8.9%
For the 2014 fiscal year that concluded on September 30, U.S. tax revenue grew by 8.9% to $3.02 trillion.This was $247 billion more in tax revenue than the federal government received in 2013. With spending growth of 1% and an 8.9% increase in tax revenue, the deficit declined to $483 billion.
The 2014 deficit was 2.8% of gross domestic product (GDP). Federal revenue grew from 16.7% of the economy in 2013 to 17.5% by 2014. However, even with a lower deficit the national debt will increase to about $18 trillion by December of 2014.
Treasury Secretary Jacob Lew explained that the reduced deficit was “due to a combination of higher receipts and stable outlays” during 2014. The prime increase in tax revenue came from increasing the top individual tax rate to 39.6%, the top capital gain rate to 23.8% and from growth of corporate tax payments.
The tax receipts for fiscal year 2014 increased in almost all categories.
Category Revenue (Billions)
Individual Income Tax $1,395B
Corporate Income Tax 321B
Social Security/Medicare Tax 1,024B
Excise Tax 93B
Estate/Gift Tax 19B
Customs Duties 34B
Miscellaneous Tax 135B
Total $3,021B
Editor’s Note: There will be an adjustment in the 2014 deficit numbers. During the November lame duck session, Congress will consider the 53 tax extenders such as the IRA charitable rollover. These are very likely to be passed and made retroactive to January 1. Part of the $25 billion in cost for the tax extenders will be an adjustment for the 2014 deficit number.
FINANCESStocks - Google Hits a Skid
Google Inc. (GOOG) announced its third quarter results on Thursday, October 16. Though revenue increased, net earnings fell nearly 5% year-over-year.
Google reported that revenue during the fourth quarter was $16.5 billion. This was a 20% increase over the $13.75 billion reported during the same period last year.
“Google had another strong performance this quarter, with revenue up 20% year on year, at $16.5 billion,” said Google CFO Patrick Pichette. “We continue to be excited about the growth in our advertising and emerging businesses.”
Net income during the quarter was $2.81 billion or $4.09 per share. This was an unexpected drop from the $2.97 billion or $4.38 per share reported during the comparable period last year.
For most of its recent history Google has met or exceeded investor expectations. The company’s disappointing third quarter, however, has investors concerned. The net income decline was driven by a 30% increase in operating expenses as Google added close to 3,000 employees during the quarter. In addition, ads—or paid clicks—increased at a slower rate this quarter than expected. Understandably, some investors are concerned that the company could be increasing expenses at a faster rate than revenues can grow, thus diminishing profitability. Because of these concerns Google saw its share price fall close to 3% following the earnings announcement.
Google Inc. (GOOG) shares ended the week at $511.17.
Netflix a Victim of Its Own Success
Netflix Inc. (NFLX), a leading provider of streaming video, announced its third quarter results on Wednesday, October 15. Investors were disappointed that the company’s subscriber growth missed expectations.
Third quarter revenue increased to $1.22 billion compared to $884 million during the same period last year. Net income was also higher year-over-year as it increased to $59 million or $0.96 per share compared to $32 million or $0.52 per share last year.
“Around the world, people are discovering the joy of Internet TV,” said Netflix CEO Reed Hastings and CFO David Wells in a letter to shareholders. “With an incredible variety of original series, films and exclusive licensed content arriving on Netflix in the coming quarters, we will continue to thrill our members and expand our memberships.”
Though Netflix saw impressive gains in revenue and net income during the third quarter, subscriber growth disappointed investors. During the quarter Netflix added nearly 3 million subscribers to bring its global total to around 53 million. That figure, however, was lower than previously forecast.
Netflix appears to be a victim of its own success with the disappointing investor reaction to its third quarter. Not often does a company see significant revenue and income growth that fails to impress Wall Street. So far this year Netflix’s subscriber growth beat the company’s own internal forecasts, but this quarter missed the mark. It did not help that HBO revealed plans this week to make its streaming HBO Go service available for the first time to consumers without a cable subscription. Fortunately, a number of analysts believe investors will eventually look past the lower-than-expected subscriber growth to recognize that Netflix continues to be a great investment.
Netflix Inc. (NFLX) shares ended the week at $357.09.
American Express Has Solid Quarter
American Express Company (AXP) announced its third quarter results on Wednesday, October 15. The company experienced a solid increase in profit even as revenue growth was flat.
The company reported that revenue for the third quarter was $8.33 billion. This was barely an increase over the $8.3 billion reported during the same period last year.
“We delivered another solid quarter of financial results,” said Kenneth I. Chenault, Chairman and CEO. “Over the last couple of years we have delivered solid earnings through a combination of disciplined expense control, a strong balance sheet and targeted investments in growth initiatives. While the economy is stronger, it is not growing as fast or as steadily as most people would like, and those same levers will continue to be an important part of our strategy.”
Net income during the quarter was $1.48 billion or $1.40 per share. This was an 8% increase over the $1.37 billion reported during the comparable period last year.
American Express is unique among its competitors in that it issues its own credit cards while Visa and MasterCard issue theirs through banks. The company’s third quarter was helped by a 9% increase in spending by its customers. Investors had to be pleased to see the world’s largest credit card issuer post solid profit growth amid a lukewarm economic environment.
American Express Company (AXP) shares ended the week at $82.58.
The Dow started the week of 10/13 at 16,535 and closed at 16,380 on 10/17. The S&P 500 started the week at 1,906 and closed at 1,887. The NASDAQ started the week at 4,275 and closed at 4,258.
Bonds - Treasuries Fall as Economic Confidence Grows
Treasury prices fell on Friday, October 17 as new data provided a positive light on the direction of the U.S. economy. Discouraging global news, however, led investors to believe the Federal Reserve may still hold back interest rate increases.
A positive housing report was released on Friday showing that housing starts increased 6.3% to a 1.02 million annualized rate in September. This was higher than the 957,000 annualized pace recorded for August. Economists had expected the September pace to be 1 million homes.
Further positive news came in the form of the Thompson Reuters consumer sentiment index. This month the index increased to 86.4 from a final reading of 84.6 in September. This month’s reading was the strongest since July 2007 and was better than the expected reading of 84.
In response to the improving U.S. economy Treasury prices fell and yields rose. “As domestic numbers get better, it makes people feel better,” said Kevin Giddis, Executive Vice President and Head of Fixed-Income capital markets at Raymond James & Associates Inc.
Concerns in Europe, however, dampened some of the speculation that an improving U.S. economy would lead the Federal Reserve to increase interest rates in October 2015. Even as the U.S. economy sees positive signs, many analysts are concerned about slowing global growth. As such, analysts believe there is a reduced chance the Federal Reserve will raise interest rates beyond its current zero to 0.25% range.
The 10-year Treasury note yield finished the week of 10/13 at 2.20% while the 30-year Treasury note yield finished the week at 2.97%.
CDs and Mortgages - Interest Rates Continue Fall
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, October 16. The results show mortgage rates falling again this week as Treasury yields dipped lower.
The 30-year fixed rate mortgage averaged 3.97% this week. This was a decrease from last week when it averaged 4.12%.
This week, the 15-year fixed rate mortgage averaged 3.18%. This was down from last week when the 15-year fixed rate mortgage averaged 3.30%.
Frank Nothaft, Vice President and Chief Economist at Freddie Mac, had this to say about this week’s rates: “Mortgage rates were down sharply following the decline in the 10-year Treasury yield for the second straight week. Rates are at their lowest levels since June 2013 amidst continued investor skepticism regarding the precarious economic situation in Europe.”
The money market fund finished the week of 10/13 at 0.4%. The 1-year CD finished at 0.7%.
_____________________________
Are you a Nazarene Legacy Partner (NLP)? The answer is “YES” if you have designated any gift to a Nazarene ministry in your will, bequest, or estate plan. This could be a tithe on your estate, an insurance beneficiary designation to your local church, college, global mission, or any other Nazarene ministry you support.
Send us your name and contact information by reply email and indicate “I am a Nazarene Legacy Partner” and we will add your name to our NLP honor roll. To model generosity inspires others to do the same. Thank you for your interest in gift planning. To access any of this updated financial and gift planning information, please select our website.
Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, Kansas 66220 United States
_____________________________
No comments:
Post a Comment