Donor Advised Fund if your tax circumstances will change in the future

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Earl Lemongrab
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Donor Advised Fund if your tax circumstances will change in the future

Post by Earl Lemongrab » Sun Dec 17, 2017 4:17 pm

The usual advice for Donor Advised Fund (DAF) use is to put in the yearly (or perhaps two years) donation amount and disperse relatively soon to minimize the relatively high fees. If one thinks that future years will not allow deducting charitable contributions (for whatever reason) would it make sense to put say ten years worth in the fund this year? You still get the benefit of deduction and donating appreciated shares and all that.

Any thoughts?

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by jebmke » Sun Dec 17, 2017 4:20 pm

Earl Lemongrab wrote:
Sun Dec 17, 2017 4:17 pm
The usual advice for Donor Advised Fund (DAF) use is to put in the yearly (or perhaps two years) donation amount and disperse relatively soon to minimize the relatively high fees. If one thinks that future years will not allow deducting charitable contributions (for whatever reason) would it make sense to put say ten years worth in the fund this year? You still get the benefit of deduction and donating appreciated shares and all that.

Any thoughts?
That can make sense. This is a variation on bunching. I put in about 10 years in mine when I retired and my tax rate was high compared to the first 10 years of retirement.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Ged » Sun Dec 17, 2017 4:30 pm

If your fund is like mine (Fidelity) the fees are applied to the amount that is in the fund on an annual basis.

You get the full amount of the donation to the DAF as a deduction.

The fees reduce the amount that accumulates in the DAF due to investment of the funds in the DAF and thus the amount that the charities eventually get.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Earl Lemongrab » Sun Dec 17, 2017 4:41 pm

Ged wrote:
Sun Dec 17, 2017 4:30 pm
If your fund is like mine (Fidelity) the fees are applied to the amount that is in the fund on an annual basis.

You get the full amount of the donation to the DAF as a deduction.

The fees reduce the amount that accumulates in the DAF due to investment of the funds in the DAF and thus the amount that the charities eventually get.
Right, that's how I understood it. That's why the pay-as-you-go is often recommended. But that assumes that each year you can deduct the contribution. If in future years you think (for whatever reason) it's likely that in the future your potential deductions won't exceed the standard deduction (for whatever reason) then you'll be losing 25% or so tax deduction on the contribution.

Nothing would keep you from making up the loss due to several years of some of the funds sitting in the DAF in the future. Or even accounting for them with say an extra 5% contribution to the DAF at the beginning.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by jebmke » Sun Dec 17, 2017 4:58 pm

Earl Lemongrab wrote:
Sun Dec 17, 2017 4:41 pm
Nothing would keep you from making up the loss due to several years of some of the funds sitting in the DAF in the future. Or even accounting for them with say an extra 5% contribution to the DAF at the beginning.
That is my view. We intend to make up the cost.
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by House Blend » Sun Dec 17, 2017 4:59 pm

Keep in mind that you can't claim more than 30% of AGI as a deduction when donating shares. So if you were planning to megabunch 10 years x 5% AGI at once, you can only take 30%. The remaining 20% carries forward to the next tax year. (The carryover clock expires after 5 years.)

See Pub. 526 for details.

This isn't necessarily a reason to not mega-bunch, but it means that you may have to spread the deduction over multiple tax years whether you like it or not.

That said, I see multiple reasons to prefer QCDs over donating appreciated shares, and expect most of my post-70.5 donations to be the former. (Unless the law is changed to allow QCDs to go to DAFs.)

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by jebmke » Sun Dec 17, 2017 5:06 pm

House Blend wrote:
Sun Dec 17, 2017 4:59 pm
Keep in mind that you can't claim more than 30% of AGI as a deduction when donating shares.
Correct; PSA for HRBlock users - you need to go into forms view and select the form for this donation and scroll down and select 30% in the drop down box (IIRC it is about half-way down the page). If you fail to do this and exceed the 30% you will get a nice letter from the IRS inasmuch as the software assumes that all non-cash donations are 50% donations. As far as I know, there is no way to specify in the normal UI dialogs that this is a 30% donation.

Any amount in excess of the 30% will carryover to next year if you itemize next year.
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by dm200 » Sun Dec 17, 2017 5:09 pm

Earl Lemongrab wrote:
Sun Dec 17, 2017 4:17 pm
The usual advice for Donor Advised Fund (DAF) use is to put in the yearly (or perhaps two years) donation amount and disperse relatively soon to minimize the relatively high fees. If one thinks that future years will not allow deducting charitable contributions (for whatever reason) would it make sense to put say ten years worth in the fund this year? You still get the benefit of deduction and donating appreciated shares and all that.
Any thoughts?
I don't think this could or should be termed "usual". There are many reasons to use a DAF, as well as many ways of using one. While this may be common, as well as fits the needs/desires of a great many, it is only one.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Ged » Sun Dec 17, 2017 5:26 pm

Earl Lemongrab wrote:
Sun Dec 17, 2017 4:41 pm

Right, that's how I understood it. That's why the pay-as-you-go is often recommended. But that assumes that each year you can deduct the contribution.
Yes. Pay as you go is a good general recommendation while you are working because on average your income will be higher next year. When you are in your last year before retirement it is time to consider that you are probably in an empty nest situation with a paid off house and perhaps the highest tax bracket of your lifetime - and the next year you will likely be in a lower bracket.

This is the most likely time for a bunching strategy, and one component of that strategy that makes a lot of sense is starting a DAF.

Other life changes can make bunching a good strategy as well.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by curmudgeon » Sun Dec 17, 2017 7:54 pm

We loaded up the DAF with a large lump in the year before retirement, while our marginal rates were high. One little gotcha to watch out for, though; this generated a large state income tax refund, which then counts as AGI for ACA subsidy purposes the next year...

We have one more likely "high tax" year sometime in the next few years, when/if we sell our current house (which was previously a rental, and so does not qualify for full exclusion of gains). We will probably do another lump sum of appreciated stock to the DAF at that point.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Theseus » Sun Dec 17, 2017 10:55 pm

Earl Lemongrab wrote:
Sun Dec 17, 2017 4:17 pm
The usual advice for Donor Advised Fund (DAF) use is to put in the yearly (or perhaps two years) donation amount and disperse relatively soon to minimize the relatively high fees. If one thinks that future years will not allow deducting charitable contributions (for whatever reason) would it make sense to put say ten years worth in the fund this year? You still get the benefit of deduction and donating appreciated shares and all that.

Any thoughts?
I am doing exactly the same thing for 2017 since I won’t be itemizing starting 2018. I just ran scenarios in TurboTax with different amounts going into DAF in chunks of $5000. I ran it until I reached a limit that won’t reduce my taxes any further. So I am going to transfer a larger chunk this year up to that limit. I am able to save about 25% in taxes in this year. And Fidelity charitable has agreed to waive my first year fees I should be good for now. But even if they charge 0.6% fees I will come ahead.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Wagnerjb » Sun Dec 17, 2017 11:21 pm

jebmke wrote:
Sun Dec 17, 2017 4:20 pm
Earl Lemongrab wrote:
Sun Dec 17, 2017 4:17 pm
The usual advice for Donor Advised Fund (DAF) use is to put in the yearly (or perhaps two years) donation amount and disperse relatively soon to minimize the relatively high fees. If one thinks that future years will not allow deducting charitable contributions (for whatever reason) would it make sense to put say ten years worth in the fund this year? You still get the benefit of deduction and donating appreciated shares and all that.

Any thoughts?
That can make sense. This is a variation on bunching. I put in about 10 years in mine when I retired and my tax rate was high compared to the first 10 years of retirement.
I put a similar amount in during my high earning years shortly before retirement. I plan to put another 5 years worth this week since I don't expect to be itemizing in the future.

Best wishes.
Andy

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Wagnerjb » Sun Dec 17, 2017 11:36 pm

House Blend wrote:
Sun Dec 17, 2017 4:59 pm
Keep in mind that you can't claim more than 30% of AGI as a deduction when donating shares. So if you were planning to megabunch 10 years x 5% AGI at once, you can only take 30%. The remaining 20% carries forward to the next tax year. (The carryover clock expires after 5 years.)

See Pub. 526 for details.
Page 14 indicates that your deduction limit is 20% if the shares are appreciated.

Best wishes.
Andy

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by jebmke » Mon Dec 18, 2017 8:40 am

Wagnerjb wrote:
Sun Dec 17, 2017 11:36 pm
House Blend wrote:
Sun Dec 17, 2017 4:59 pm
Keep in mind that you can't claim more than 30% of AGI as a deduction when donating shares. So if you were planning to megabunch 10 years x 5% AGI at once, you can only take 30%. The remaining 20% carries forward to the next tax year. (The carryover clock expires after 5 years.)

See Pub. 526 for details.
Page 14 indicates that your deduction limit is 20% if the shares are appreciated.

Best wishes.
A Donor Advised Fund is a 50% charity (for cash purposes) so the 20% doesn't apply. DAFs are 30% limit organizations for appreciate securities.
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by stan1 » Mon Dec 18, 2017 8:48 am

Note on timing: The clock is ticking on 2017. If you are thinking about it you probably want to make a decision ASAP. In my experience donating appreciated ETF holdings at Vanguard to my Fidelity Charitable Donor Advised Fund requires a wet signature returned by US Mail. Vanguard Charitable's initial contribution and minimum grant size do not meet my needs.

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Re: Donor Advised Fund if your tax circumstances will change in the future

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Re: Donor Advised Fund if your tax circumstances will change in the future

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Earl Lemongrab » Mon Dec 18, 2017 5:43 pm

Thanks for getting the thread reopened. To clarify, there are a number of reasons why someone's personal circumstances might allow deducting charitable contributions this year but not in future years. The reasons aren't important! Only the mechanics. Let's keep the thread on-track.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by dm200 » Mon Dec 18, 2017 6:17 pm

Earl Lemongrab wrote:
Mon Dec 18, 2017 5:43 pm
Thanks for getting the thread reopened. To clarify, there are a number of reasons why someone's personal circumstances might allow deducting charitable contributions this year but not in future years. The reasons aren't important! Only the mechanics. Let's keep the thread on-track.
Absolutely true. However, the tax deduction issue is only one of many reasons for using a DAF to spread out the distributions to the charity(ies) over many years.

In our case, having funds there provided asset protection to fund our preferred charities over many years - and those charities (for various reasons) are not in the position of getting a relatively large sum and spreading its use out over many years.
Last edited by dm200 on Mon Dec 18, 2017 6:21 pm, edited 1 time in total.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by jebmke » Mon Dec 18, 2017 6:19 pm

dm200 wrote:
Mon Dec 18, 2017 6:17 pm
Earl Lemongrab wrote:
Mon Dec 18, 2017 5:43 pm
Thanks for getting the thread reopened. To clarify, there are a number of reasons why someone's personal circumstances might allow deducting charitable contributions this year but not in future years. The reasons aren't important! Only the mechanics. Let's keep the thread on-track.
Absolutely true. However, the tax deduction issue is only one of many reasons for using a DAF to spread out the distributions to the charity(ies) over many years.
In many cases you can still do this using the DAF as only a pass-through. Just push through enough for each year. Obviously, there are situations where the large blast is the only solution. We had a legacy stock that got bought out so I had to dump it in the DAF before the deal closed or I was going to get hit with the gain on the sale.
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Wagnerjb » Mon Dec 18, 2017 7:07 pm

jebmke wrote:
Mon Dec 18, 2017 8:40 am
Wagnerjb wrote:
Sun Dec 17, 2017 11:36 pm
House Blend wrote:
Sun Dec 17, 2017 4:59 pm
Keep in mind that you can't claim more than 30% of AGI as a deduction when donating shares. So if you were planning to megabunch 10 years x 5% AGI at once, you can only take 30%. The remaining 20% carries forward to the next tax year. (The carryover clock expires after 5 years.)

See Pub. 526 for details.
Page 14 indicates that your deduction limit is 20% if the shares are appreciated.

Best wishes.
A Donor Advised Fund is a 50% charity (for cash purposes) so the 20% doesn't apply. DAFs are 30% limit organizations for appreciate securities.
Jebmke - thanks for the clarification! Boy, that sure isn't obvious from reading Pub 526..... :confused
Andy

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Artsdoctor » Mon Dec 18, 2017 8:01 pm

Earl Lemongrab wrote:
Mon Dec 18, 2017 5:43 pm
Thanks for getting the thread reopened. To clarify, there are a number of reasons why someone's personal circumstances might allow deducting charitable contributions this year but not in future years. The reasons aren't important! Only the mechanics. Let's keep the thread on-track.
I really don't think that the fees associated with DAFs are exorbitant. There is nothing at all wrong with donating a very large chunk one year and working off of it in subsequent years.

It took me a while view DAFs and giving the way that I currently do. My thoughts have evolved over many years.

I donate appreciated shares as a form of rebalancing. The better the market, the more I'm inclined to donate. (Likewise, during a market downturn, I don't donate appreciated shares since I have a large cushion invested conservatively in my DAF.)

Once the money is in the DAF, it's really no longer mine. Consequently, I make donations based on how the DAF is doing from a financial point of view. If there's been a run-up in DAF assets, I may choose to increase the grant amounts or expand to non-profits which I may not contribute to annually. Likewise, if the balance of the DAF has dwindled, I may cut back on donations; I view the DAF as its own entity (and not my portfolio). Over the years, this has really increased the efficiency of charitable contributions, as least for me.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by annielouise » Mon Dec 18, 2017 8:22 pm

We just paid off our house, so we are donating a large amount to our DAF to get the tax break this year. With retirement now 9 years away (fingers crossed), we don't mind having extra accumulate for the future non working years either.
My favorite thing about the DAF is the anonymity. No more mail, calls, or emails asking for more donations. Charities only get the name of the fund, not our names or address.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by WoodSpinner » Mon Dec 18, 2017 8:29 pm

jebmke wrote:
Sun Dec 17, 2017 4:20 pm
Earl Lemongrab wrote:
Sun Dec 17, 2017 4:17 pm
The usual advice for Donor Advised Fund (DAF) use is to put in the yearly (or perhaps two years) donation amount and disperse relatively soon to minimize the relatively high fees. If one thinks that future years will not allow deducting charitable contributions (for whatever reason) would it make sense to put say ten years worth in the fund this year? You still get the benefit of deduction and donating appreciated shares and all that.

Any thoughts?
That can make sense. This is a variation on bunching. I put in about 10 years in mine when I retired and my tax rate was high compared to the first 10 years of retirement.
It’s a strategy I plan to employ in future years. You do have to pay attention to the limits on cash and other types of donations (e.g. Equities) .

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Careful » Mon Dec 18, 2017 9:30 pm

stan1 wrote:
Mon Dec 18, 2017 8:48 am
Note on timing: The clock is ticking on 2017. If you are thinking about it you probably want to make a decision ASAP. In my experience donating appreciated ETF holdings at Vanguard to my Fidelity Charitable Donor Advised Fund requires a wet signature returned by US Mail. Vanguard Charitable's initial contribution and minimum grant size do not meet my needs.
I found out it is much quicker to initiate it via wherever you are holding the funds, vs Fidelity Char (where I have a DAF). If you start at Fidelity Charitable, it can take around 6 weeks to process the appreciated securities. Didn't need a wet sig -- fax was fine.

And, I work at a nonprofit and when brokers call us to initiate a transfer of securities, it just takes a few days for it all to go through (from the time they call and request the info. (BTW we have no problem receiving securities -- we just provide our broker info -- so you can definitely donate directly to a charity.)

So I think the main point is start with wherever you have the funds and direct them to whoever you want to donate them to (whether it is a DAF or a 'regular nonprofit').

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Pigeye Brewster » Mon Dec 18, 2017 10:54 pm

Careful wrote:
Mon Dec 18, 2017 9:30 pm
stan1 wrote:
Mon Dec 18, 2017 8:48 am
Note on timing: The clock is ticking on 2017. If you are thinking about it you probably want to make a decision ASAP. In my experience donating appreciated ETF holdings at Vanguard to my Fidelity Charitable Donor Advised Fund requires a wet signature returned by US Mail. Vanguard Charitable's initial contribution and minimum grant size do not meet my needs.
I found out it is much quicker to initiate it via wherever you are holding the funds, vs Fidelity Char (where I have a DAF). If you start at Fidelity Charitable, it can take around 6 weeks to process the appreciated securities. Didn't need a wet sig -- fax was fine.

And, I work at a nonprofit and when brokers call us to initiate a transfer of securities, it just takes a few days for it all to go through (from the time they call and request the info. (BTW we have no problem receiving securities -- we just provide our broker info -- so you can definitely donate directly to a charity.)

So I think the main point is start with wherever you have the funds and direct them to whoever you want to donate them to (whether it is a DAF or a 'regular nonprofit').
My experience has been much different donating Vanguard funds (in mutual fund style account) to Fidelity Charitable. I've done two transfers in the last 6 weeks or so and both took about 4-5 days start to finish. The first one was to fund the DAF. The second was the first week of December, after the year-end cutoff date on the Fideliy Charitable website (I called and confirmed it wasn't a hard cut-off date).

I simply filled out the letter of instruction, faxed to Fidelity Charitable, and within a day or two the transfers were shown on my Vanguard account, then a couple of days after that they were reflected in the DAF as available for grants.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by dm200 » Tue Dec 19, 2017 12:11 pm

Here is another DAF (Fidelty in our case) possible benefit - Once or twice over the years, there have been occasions where our requested recipient of a "grant" never cashed the check. After a certain period, Fidelity cances the grant and puts the money back in the account. No muss - no fuss - and no tax implications.

If this were a regular donation check sent to the charity or appreciated stock - such a screwup could have significant adverse impact on the donor.

I can also add that many fine, but small, charitable entities are not well equipped to handle appreciated holdings or would incur more trouble and/or expense to accept and liquidate such a donation.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by kmurp » Tue Dec 19, 2017 1:22 pm

So is it too late in the year to open one of these and fund it?

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by dm200 » Tue Dec 19, 2017 1:56 pm

kmurp wrote:
Tue Dec 19, 2017 1:22 pm
So is it too late in the year to open one of these and fund it?
Maybe not - contact the DAF (we use Fidelity) and see.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by FIREchief » Tue Dec 19, 2017 2:02 pm

kmurp wrote:
Tue Dec 19, 2017 1:22 pm
So is it too late in the year to open one of these and fund it?
It depends. If you have $5K in funds at Fidelity (preferably appreciated shares), and you do it through Fidelity you *may* be able to complete the setup and initial funding by year end. If you require any phone assistance between now and Dec 31 you may incur lengthy waits. DAFs are extremely busy at the end of each year.
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Cruise » Tue Dec 19, 2017 2:44 pm

kmurp wrote:
Tue Dec 19, 2017 1:22 pm
So is it too late in the year to open one of these and fund it?
Not too late according to my conversation with Fidelity. To use funds in investment accounts, need to fund the Charitable account by 12/26. At least that was what he told me.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Gill » Tue Dec 19, 2017 2:45 pm

kmurp wrote:
Tue Dec 19, 2017 1:22 pm
So is it too late in the year to open one of these and fund it?
You might check with Schwab also. Their DAF is very attractive, much like Fidelity's, and I had a friend who opened one there a few days ago. It can be opened online in a few minutes.
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by FIREchief » Tue Dec 19, 2017 7:37 pm

Cruise wrote:
Tue Dec 19, 2017 2:44 pm
kmurp wrote:
Tue Dec 19, 2017 1:22 pm
So is it too late in the year to open one of these and fund it?
Not too late according to my conversation with Fidelity. To use funds in investment accounts, need to fund the Charitable account by 12/26. At least that was what he told me.
I don't understand the 12/26, unless you're talking strictly about a brand new DAF. I've donated shares (held at Fido) to my Fido DAF later in December without issue in the past. Anybody else had issues with 12/27, 12/28, etc. donations?

Just like the OP, my tax circumstances *may* change in the (very near) future, but I may not know for sure until later this week.
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Cruise » Tue Dec 19, 2017 8:54 pm

FIREchief wrote:
Tue Dec 19, 2017 7:37 pm
I don't understand the 12/26, unless you're talking strictly about a brand new DAF.
Exactly the situation.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Pigeye Brewster » Tue Dec 19, 2017 9:24 pm

Here's the link to Fidelity's year-end deadlines.
https://www.fidelitycharitable.org/what ... ines.shtml

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by FIREchief » Tue Dec 19, 2017 10:34 pm

Pigeye Brewster wrote:
Tue Dec 19, 2017 9:24 pm
Here's the link to Fidelity's year-end deadlines.
https://www.fidelitycharitable.org/what ... ines.shtml
Excellent! Thank you. Dec 31 for shares held at Fidelity and donated via the web. I'm guessing a 12/30 or 12/31 donation would still be credited as a 2017 contribution, but valued based upon 1/2/18 share pricing.
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Earl Lemongrab » Wed Dec 20, 2017 3:50 pm

I did set up a DAF with Fidelity and linked it to my brokerage account. As noted, the process there is simple and can be done totally online. The shares I'd really like to donate are at another brokerage, so I have a transfer in work to get them over. If it doesn't look like that will happen, go to Plan B.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by cadreamer2015 » Wed Dec 20, 2017 4:12 pm

I set up my DAF at Fidelity on-line on Monday. The shares I want to donate are held at Vanguard's brokerage. Fidelity suggested having the shares pushed from Vanguard rather than fulled from Fidelity. I submitted the Vanguard paperwork to have the shares transfered via fax on Monday afternoon, and it looks like the transfer has started on Tuesday. I expect the shares to be in my DAF account today or at least this week.
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Pigeye Brewster
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Pigeye Brewster » Wed Dec 20, 2017 5:55 pm

cadreamer2015 wrote:
Wed Dec 20, 2017 4:12 pm
I set up my DAF at Fidelity on-line on Monday. The shares I want to donate are held at Vanguard's brokerage. Fidelity suggested having the shares pushed from Vanguard rather than fulled from Fidelity. I submitted the Vanguard paperwork to have the shares transfered via fax on Monday afternoon, and it looks like the transfer has started on Tuesday. I expect the shares to be in my DAF account today or at least this week.
Interesting. I faxed a letter of instruction to Fidelity on December 5 and Vanguard did the transfer on December 6.

One difference is my Vanguard shares are in a mutual fund account rather than brokerage, so that might make a difference for some reason. Or maybe it was just me getting my transfer paperwork in before the big rush.

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SlowMovingInvestor
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by SlowMovingInvestor » Wed Dec 20, 2017 6:06 pm

If you open a DAF at Fido, can you transfer specific share lots (highly appreciated ones) from a holding in another Fido account ? I did try a trial run with 2 Fido (non DAF accounts), and it didn't seem to give me any way to pick a specific lot from which to take the shares.

kmurp
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by kmurp » Wed Dec 20, 2017 6:32 pm

Took me five minutes to set up at Fidelity and transfer appreciated shares that are also held at Fidelity. Very easy. Excellent website and integration with fidelity brokerage.

Pigeye Brewster
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Pigeye Brewster » Wed Dec 20, 2017 9:53 pm

SlowMovingInvestor wrote:
Wed Dec 20, 2017 6:06 pm
If you open a DAF at Fido, can you transfer specific share lots (highly appreciated ones) from a holding in another Fido account ? I did try a trial run with 2 Fido (non DAF accounts), and it didn't seem to give me any way to pick a specific lot from which to take the shares.
Take a look at section 2 ("Assets from a Fidelity Investments Account") of the Contribution Form/Letter of Instruction linked below. It allows you to specify specific lots.
https://www.fidelitycharitable.org/docs ... bution.pdf

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SlowMovingInvestor
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by SlowMovingInvestor » Wed Dec 20, 2017 10:21 pm

Pigeye Brewster wrote:
Wed Dec 20, 2017 9:53 pm
SlowMovingInvestor wrote:
Wed Dec 20, 2017 6:06 pm
If you open a DAF at Fido, can you transfer specific share lots (highly appreciated ones) from a holding in another Fido account ? I did try a trial run with 2 Fido (non DAF accounts), and it didn't seem to give me any way to pick a specific lot from which to take the shares.
Take a look at section 2 ("Assets from a Fidelity Investments Account") of the Contribution Form/Letter of Instruction linked below. It allows you to specify specific lots.
https://www.fidelitycharitable.org/docs ... bution.pdf
Thanks ! Unfortunately, I happen to be out of the country until the morning of the 30th. I suppose I could fax the form in, but too bad it can't be done online.

Does the transfer have to be actually completed before the end of the year, or merely initiated by the end of the year ?

EDIT: I see from Fido's site, that a fax merely has to be sent by the end of the year (although I suppose it still needs to arrive on a business day)

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Pigeye Brewster » Wed Dec 20, 2017 10:56 pm

SlowMovingInvestor wrote:
Wed Dec 20, 2017 10:21 pm
Thanks ! Unfortunately, I happen to be out of the country until the morning of the 30th. I suppose I could fax the form in, but too bad it can't be done online.
Don't hesitate to fax it in. I've faxed the letter of instruction in to transfer assets from Vanguard. Very quick turnaround, i.e. about 1 day. Should be even faster for a Fidelity in-house transfer.

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FIREchief
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by FIREchief » Thu Dec 21, 2017 12:35 am

SlowMovingInvestor wrote:
Wed Dec 20, 2017 6:06 pm
If you open a DAF at Fido, can you transfer specific share lots (highly appreciated ones) from a holding in another Fido account ? I did try a trial run with 2 Fido (non DAF accounts), and it didn't seem to give me any way to pick a specific lot from which to take the shares.
You absolutely can make a donation of shares held in a Fidelity brokerage account, to a Fidelity Charitable DAF, while specifying specific share lots. If you aren't seeing how to do this on the website, just look a bit closer. There is no reason you should have to resort to a paper process for this. I've done it numerous times without incident. The Fidelity Charitable website is where you make this donation, and it steps you through the whole process. Are you sure your brokerage holdings are set up for "spec lot" basis calculation?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Leif
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Leif » Thu Dec 21, 2017 1:33 am

It looks like for the Fidelity DAF it can be setup on-line. But to fund it requires paperwork, correct? I will be funding it from a cash position of my Fidelity account. I have an investment center nearby, so I could drop the signed form there.

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SlowMovingInvestor
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by SlowMovingInvestor » Thu Dec 21, 2017 4:14 am

FIREchief wrote:
Thu Dec 21, 2017 12:35 am
SlowMovingInvestor wrote:
Wed Dec 20, 2017 6:06 pm
If you open a DAF at Fido, can you transfer specific share lots (highly appreciated ones) from a holding in another Fido account ? I did try a trial run with 2 Fido (non DAF accounts), and it didn't seem to give me any way to pick a specific lot from which to take the shares.
You absolutely can make a donation of shares held in a Fidelity brokerage account, to a Fidelity Charitable DAF, while specifying specific share lots. If you aren't seeing how to do this on the website, just look a bit closer. There is no reason you should have to resort to a paper process for this. I've done it numerous times without incident. The Fidelity Charitable website is where you make this donation, and it steps you through the whole process. Are you sure your brokerage holdings are set up for "spec lot" basis calculation?
Yes, my brokerage holdings are per lot, and I've sold per lot for many, many years now.

I was trying the transfer between 2 regular Fido accounts as a trial from the regular web page since I haven't opened the DAF account yet. I thought the transfer pages for xfer to a Charitable account would be similar. But if there is a separate page for Fido Charitable, they must have implemented the functionality there.

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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Theseus » Thu Dec 21, 2017 5:06 am

SlowMovingInvestor wrote:
Wed Dec 20, 2017 6:06 pm
If you open a DAF at Fido, can you transfer specific share lots (highly appreciated ones) from a holding in another Fido account ? I did try a trial run with 2 Fido (non DAF accounts), and it didn't seem to give me any way to pick a specific lot from which to take the shares.
Yes you can. I have not done this online. But when I talked to the rep at fidelity charitable he himself indicated which lots would be best for me to transfer. And he said he can do that on the phone. I haven’t done it since I am still trying to figure out the final amount. But will do in a couple of days.

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Leif
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by Leif » Thu Dec 21, 2017 2:28 pm

Leif wrote:
Thu Dec 21, 2017 1:33 am
It looks like for the Fidelity DAF it can be setup on-line. But to fund it requires paperwork, correct? I will be funding it from a cash position of my Fidelity account.
To answer my own question, no paperwork is required at all. I set up the Fidelity DAF account on-line and funded it on-line from my Fidelity cash account. Very easy. Just needed to specify how the funds are to be invested. I picked the index funds and money market. Index funds are institutional so the ER is VERY low. I'm told as I make donations the percentages I specified are maintained automatically. Not only that, but the DAF account shows up in my Fidelity website page. Perfect.

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FIREchief
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Re: Donor Advised Fund if your tax circumstances will change in the future

Post by FIREchief » Thu Dec 21, 2017 3:52 pm

SlowMovingInvestor wrote:
Thu Dec 21, 2017 4:14 am
FIREchief wrote:
Thu Dec 21, 2017 12:35 am
SlowMovingInvestor wrote:
Wed Dec 20, 2017 6:06 pm
If you open a DAF at Fido, can you transfer specific share lots (highly appreciated ones) from a holding in another Fido account ? I did try a trial run with 2 Fido (non DAF accounts), and it didn't seem to give me any way to pick a specific lot from which to take the shares.
You absolutely can make a donation of shares held in a Fidelity brokerage account, to a Fidelity Charitable DAF, while specifying specific share lots. If you aren't seeing how to do this on the website, just look a bit closer. There is no reason you should have to resort to a paper process for this. I've done it numerous times without incident. The Fidelity Charitable website is where you make this donation, and it steps you through the whole process. Are you sure your brokerage holdings are set up for "spec lot" basis calculation?
Yes, my brokerage holdings are per lot, and I've sold per lot for many, many years now.

I was trying the transfer between 2 regular Fido accounts as a trial from the regular web page since I haven't opened the DAF account yet. I thought the transfer pages for xfer to a Charitable account would be similar. But if there is a separate page for Fido Charitable, they must have implemented the functionality there.
This is correct. The Fidelity Charitable website is very well integrated with your Fidelity accounts, and you have various options to pre-select long term, appreciated shares. When I first used it several years ago, I was amazed at how simple and straightforward it was. Be aware of the following (hopefully I've remembered all this correctly, YMMV):

a) If you transfer mutual funds during a weekend or during trading hours, they will be valued at the next close.

b) If you transfer mutual funds after trading day close, they will be valued at that day's close up until something like 9 pm Eastern time, but they will be sold the next day and the DAF will be credited with the proceeds from the next day closing value (i.e. your actual charitable gift may be slightly more or less than the amount of funds that wind up in your DAF)

c) If you donate ETF shares or stock shares between the ex-dividend date and the record date, you won't receive either the dividends or the value of the dividends as a charitable contribution (the DAF will be owner on the record date and the dividends will go to the DAF). This is not intuitive, but I discovered the hard way last year when I donated shares of VTI on the record date. Coincidentally, I am again ready now to donate more VTI, but today is ex-dividend date and tomorrow is record date, so I need to wait until next Tuesday. :(
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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