In today’s episode, you’ll learn more about:
- The new charitable deduction available to non-itemizers in 2026.
- Why donating appreciated stock can help avoid capital gains.
- How the new charitable deduction floor affects taxpayers who itemize.
- How qualified charitable distributions, or QCDs, work after age 70½.
- Why QCDs can be valuable even if you don’t itemize deductions.
- How future charitable giving can affect IRA withdrawals and Roth conversion planning.
- How to decide whether cash, appreciated investments, or IRA dollars are the best assets to give.
Listen Now:
The Smart Take:
If you’re already planning to give money to charity, does it matter which account the money comes from?
Absolutely.
Retirees may have several ways to fund their charitable giving: cash, appreciated investments, or distributions directly from an IRA. While the charity may receive the same amount either way, the tax consequences can be very different.
And new tax rules beginning in 2026 add another layer to the decision.
In this episode, Tyler Emrick, CFA®, CFP®, explains how retirees can think more strategically about charitable giving and decide which assets may be most advantageous to give.
If you’re already planning to support the organizations you care about, the question isn’t only how much to give. It’s which dollars should leave your balance sheet.
Go Inside the Episode:
0:00 – Intro
2:23 – Writing a Check
5:04 – Stock
10:23 – Qualified Minimum Distributions
14:17 – What’s the best strategy?
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The Hosts:
Kevin Kroskey, CFP®, MBA – About – Contact
Tyler Emrick, CFA®, CFP® – About – Contact
Episode Transcript:
Walter Storholt:
So Tyler, let’s say I’m retired and I’m planning to give 10,000 or $20,000 to charity this year. Does it really matter where that money comes from?
Tyler Emrick:
It actually can. You could write a check, you could give highly appreciated stock from your brokerage account. If you’re over 70 and a half, you could even gift directly from your IRA account as a charitable distribution.
Walter Storholt:
And the charity gets the same amount no matter what.
Tyler Emrick:
Exactly. Yep. The charity ends up with the exact same amount of money, but the tax result for you can be very different.
Walter Storholt:
And I understand some of those tax rules changed this year?
Tyler Emrick:
They did. There are some new charitable giving rules in 2026 that make this conversation even more important.
Walter Storholt:
All right. So before folks write that next check to charity, what should we be thinking about?
Tyler Emrick:
Yep, you got it. That’s what we’re going to cover today. The three different ways retirees can give to charity, when each one might make sense, and why charitable giving could really be part of your overall retirement and tax plan.
Walter Storholt:
Well, thanks for joining us for another episode of Retire Smarter. I’m Walter Storholt, as always joined by Tyler Emrick, a certified financial planner and a chartered financial analyst, one of the wealth advisors at True Wealth Design. And great episode on the way today. Hey, it’s always good when we get to talk about charitable giving, right Tyler?
Tyler Emrick:
Oh, 100%. And I mean, we’re creeping up on the end of the year here, right?
Walter Storholt:
Yes.
Tyler Emrick:
I mean, we were shopping for Halloween costumes for my two little girls. So hey, that’s a tall tale sign. The end of the year will be here before we know it. So all these tax moves and unique things that we need to get in before the end of the year, charitable giving should certainly be part of that conversation, Walt, for sure.
Walter Storholt:
Yeah. There’s kind of an interesting difference though, right? The giver is often thinking about how much can I give? But you guys as the planners and on the financial side ask a little bit of a different question, don’t you?
Tyler Emrick:
Yeah, exactly. How do you gift? We did it a little bit in the lead in, but to your point, it’s like, hey, the charity gets the same amount of money, whether you do it through a check or stock or QCD, that’s qualified charitable distribution. So well, which one’s most appropriate for your particular situation? And so that’s what we’re going to tackle today, just getting into each of those options, how you should think about them and which one might be the best way for you to be doing your gifting here towards the end of the year.
Walter Storholt:
Not only the different types, but also the rule changes and how they’re going to impact some of these decisions along the way as well.
Tyler Emrick:
You got it. Yeah. One of the rule changes affects where we’re going to kind of start, which is the simplest, easiest way to do your gifting. And that’s the pull out the old checkbook if you still got one and write a check or cash.
Walter Storholt:
Or cash, right? Okay.
Tyler Emrick:
Or cash. Or cash. Or going online, putting your debit card [inaudible 00:02:46]-
Walter Storholt:
Who has either of those these days? Yeah.
Tyler Emrick:
Yes, absolutely. But I think a lot of us do just default to, “Hey, I’m doing my gifting cash,” especially whether it be for church or maybe at the end of the year charity or you’re at a particular event and you want to drop in some cash into a Dropbox. Cash is a very common way we see families doing gifting. And a lot of families might be listening here and say, “Yeah, I do cash because I don’t itemize. So me just doing my cash gifting is I’m not getting much of a tax benefit for it.” And that kind of stems from, Walt, the standard deduction for single or married filing jointly individuals and families is very high. So there’s a big hurdle rate that we need to get to before gifting actually becomes important. Or not important, excuse me, taxes-
Walter Storholt:
So sort of the annoyance of having to track all of your giving is, that was a nice thing to just sort of get off your shoulders for a while, right?
Tyler Emrick:
Gone by the wayside.
Walter Storholt:
I have to keep track of this.
Tyler Emrick:
You got it. But one of those changes to this year’s tax code for 2026 is the fact that those cash gifts can still be taken as a deduction even if you don’t itemize. So a high percentage of families across the US just take the standard deduction. For 2026, you are actually able to deduct up to 1,000, or 2,000 if you’re married filing jointly, of those cash gifts that you give directly to church charity and the like, where otherwise in years past, you wouldn’t have been able to get that deduction if you took the standard. So that’s a big change for those individuals that maybe haven’t taken a deduction in the past or at least here recently where you might need to start tracking some of that stuff for this year. But cash gifts certainly might be a little bit of a deduction where you didn’t have one before and certainly is the easiest and cleanest way to do your gifting, but might not be the best if you have some of these other two options we’re getting ready to talk about available to you.
Walter Storholt:
Final though on that one. Would I be wrong in thinking, okay, well now I can track to that 1,000 or $2,000 level and then I don’t have to track anymore?
Tyler Emrick:
And then you don’t have to track anymore. Correct. Correct.
Walter Storholt:
Is that reasonable? Okay.
Tyler Emrick:
And make sure you communicate it with your tax professional, CPA, whoever’s handling your tax return so that way they actually can take that deduction for you, especially if it’s not something you haven’t been doing in the past, which obviously this is a new year for it.
Walter Storholt:
Well, this next one I’m intrigued with because we actually just started having this conversation with my mom the other day. She’s got some stock, not a ton, but some stock that she was given as part of compensation back in the 1980s when she first started working and she’s like, “I need to do something with this.” And for her grandson, for our son, she wanted to give it to him. And so we started to just figure out like, all right, it’s not a ton, but let’s just look at what the options are in terms of do you just sell it and then give him cash? Can you give him the stock? How does this all work? So this one we just started learning a little bit about this.
Tyler Emrick:
You got it. Yeah, no, absolutely. In the ’80s, right? I mean that stock’s probably had some growth since then I would suspect. So as your mom was kind of [inaudible 00:05:50]-
Walter Storholt:
Couple of shares, so it’s nothing crazy. But, yeah.
Tyler Emrick:
That’s fair. And well, anytime there’s those gains, we got to worry about the tax consequence of selling out them because the good old IRS is going to get their hands on a piece of it if there is gains when you want to turn that stock into cash and use it for something else or reinvest it or whatever the like is. So when we think about donating appreciated stock, this is where the benefit comes into play because when you do gift those stock to qualified church or charity or even in your case, a family member, you’re not going to get a deduction for when you gift it to the family member, but that basis goes over and then they would sell it and they might have more favorable tax treatment under it. So that’s how it would work with family. For church or charity, hey, that stock still goes over the exact same way, but you don’t have to realize any gain, just the like. So that’s the big benefit as we look at gifting that highly appreciated stock as opposed to gifting cash. You can start to offload some of these highly appreciated positions.
Now, of course, Walt, just as we talked about the tax law change with gifting cash, there is a new law in effect for 2026 when we start thinking about gifting appreciated stock positions as well. And this would be for itemizers, essentially your gifting for any itemizers really. There’s a new half a percent AGI floor on your charitable deductions. Okay?
Walter Storholt:
Okay. You’re going to have to explain that one a little bit.
Tyler Emrick:
You got it. Yeah, absolutely. So let’s say your AGI, or adjusted gross income, is $200,000. So you made $200,000 this year. Essentially you’re going to take a half a percent of that, or 1,000 bucks, and that’ll be your charitable floor. Meaning that you don’t get to actually start taking the deduction until you hit that thousand dollars of gifting and then you can deduct everything above that.
Walter Storholt:
Oh, interesting. Okay.
Tyler Emrick:
Yeah. So it sets a floor before you can start actually taking deductions. This is for any itemizer, any gifting that you’re going to take. So as we start thinking about gifting appreciated stock or even gifting cash outside of what we talked about before, the above the line deduction of a thousand or 2,000 bucks, this floor is going to apply for itemizers, which is new. We haven’t had that or had to worry about that in the past, Walt, at all.
Walter Storholt:
And that’s because the tax advantage here is so favorable that they’re just forcing it to be significant.
Tyler Emrick:
Yeah. It’s just there’s new legislation in there, right? Or they’re making it complicated and they want to keep us financial advisors employed, right? Yes, politics.
Walter Storholt:
Politics.
Tyler Emrick:
Yeah. Politics.
Walter Storholt:
You can answer that in one word. Politics. Yes, that’s why.
Tyler Emrick:
Yes. Whatever the case is, basically they’re saying, “Hey, this floor, we don’t want you to be able to deduct your gifting until you’ve hit it. And then above then you can actually take … ” That’s why last year we did … A lot of times when we think about gifting appreciated stock positions, we do it in a bunching strategy where you kind of front load a lot of your gifting for a few years. One of the reasons why we did that for a lot of families at the end of last year is that floor didn’t take effect until 2026. So it’s new for this year and it just, hey, you got to hit it before you actually start deducting. But the big benefit of gifting appreciated stock or ETFs or mutual funds or really any investment to church or charity is you get to avoid paying taxes on those gains.
Very different than just gifting cash. So how you do it, when you do it, whether you do it as a bunching strategy or a little bit each year, hey, that’s even a broader planning conversation. But certainly looking at your portfolio and saying, “Hey, are they in a situation like your mom where you’ve had this since the ’80s, ’90s, even early 2000s, whatever it is, do I want to offload some of this in a tax efficient way?” So donating appreciated stock comes up quite a bit for our families, Walt, for sure. So that’s the second option to look at.
Walter Storholt:
Yep. Unlocks some unique power.
Tyler Emrick:
It does. It does. Yeah. And I see it also from the other side of it. I’m on a few non-for-profit boards and it’s so easy to basically receive stock. We give you account information, routing information, you give that to your advisor. The stock transfers over electronically. We get it in our nonprofit account, our brokerage account. We sell it, don’t have to worry about taxes and it goes from there. So it’s always great and efficient when it works for the family that’s doing the gifting. And then of course the nonprofit always is very happy to receive those stock gifts too, and they can use them just like it was cash. So the church or charity is not getting any downside for getting that stock whatsoever, which is important.
So we’ve talked about cash, Walt, we’ve talked about gifting highly appreciated positions. The third one is basically giving directly from your individual retirement account. They call it a qualified charitable distribution or QCD for short. We like our acronyms for sure.
Walter Storholt:
Which is nice that this exists because where is a very large chunk of money going to be for a lot of retirees? It’s going to be in these IRAs. So being able to utilize that bucket for this purpose is a good thing.
Tyler Emrick:
Oh, it has quite a bit of benefits. One of the reasons why I had thought about doing this episode is I ran across an article where they were kind of getting down into the nitty-gritty of like, “Hey, when is doing a QCD better than donating appreciated stock?” Because traditionally, qualified charitable distributions have had a little bit of a leg up for most of the time because you don’t have to itemize to get the deduction. So when you think about what is a QCD, it’s basically taking money out of your IRA account and directly gifting it to church or charity. So by doing that, the IRS says, “Hey, that doesn’t even hit your tax return. We can literally pull money out of that account and it’s not taxable to you whatsoever. You can start doing these at age 70 and a half.” So that is the year you turn 70 and a half is the year that you can start looking at qualified charitable distributions. So as you think about-
Walter Storholt:
Now that number rings a bell because that used to be the RMD age, right?
Tyler Emrick:
It did. It did. It did. Which is another benefit of these, right? When you do become RMD age, which would be 73, 75 for some individuals, it will actually lower that required minimum distribution by any amount that you gift in a QCD. So if your RMD or required minimum is 10 grand and you gift five to church or charity through a QCD, now you only have to pull out the remaining five that is actually taxable to you. So you avoid it altogether. So you don’t have to worry about that floor that we talked about before, if you itemize and you donate appreciated stock. And when we think about gifting cash, you can do a QCD for much higher than a thousand or 2000 bucks and have it not even hit your tax return. So that’s why these QCDs become very important if you’re wanting to gift for an extended period of time into retirement.
Speaker 3:
What would your life look like if you designed it around your true wealth? It’s a powerful question and one that True Wealth Design helps individuals, families, and business owners answer every day. With a fully integrated approach to financial planning, tax strategy, investments, and business advisory, their team can bring clarity and confidence to every part of your financial life. Take the first step toward a stronger financial future with a no cost, no obligation discovery meeting. Just click the link in today’s show description to get started.
Walter Storholt:
It’s also nice that they didn’t move the age of the QCDs along with the RMD change. It just opens up more flexibility and things like that, right?
Tyler Emrick:
It does. It does. I mean, I was just doing a plan for a family a couple weeks ago and they have done quite a bit of Roth conversions and we had to be mindful of how much money we were actually leaving in their retirement account because if we ended up getting all that money out of a retirement account, well then hey, we could have done it free because they gift quite a bit per year to some charities and they wanted to continue to do that throughout retirement. So we left a pot of money or planned to leave a pot of money in their retirement account that we would otherwise convert at a low tax rate. We said, no, we’re going to earmark this for gifting for the big part of retirement because basically they’ll have tax-free distributions from that money because they’re planning on gifting it.
So it definitely fits in and should be a part of those distribution conversations and those planning conversations so that way you can figure out and say, “Well, which is best for me? Do I want to leave some money in an IRA and do QCDs? Do I have highly appreciated stock that I can just gift that? Am I itemizing that type of thing?’ There’s a few moving parts here as you could imagine, Walt. So seeing how it fits into your overall financial plan is kind of where a financial advisor comes into play, can talk to you about these three scenarios and make sure that if gifting is going to be a continued part of your retirement plan, well, how do we account for it and what’s the best way to do it from a tax standpoint?
I always say you don’t gift to get a tax deduction, but certainly if there’s one available in a smarter way to do it, pick it up. It allows you to give more down the road.
Walter Storholt:
Well, I was going to say, that’s the strategy, that’s the benefit if you want to look at it that way, for sure. Your $10,000 this year, if you do it right, could mean $12,000 next year, just picking random numbers.
Tyler Emrick:
100%, yes.
Walter Storholt:
That’s kind of the power of it, right?
Tyler Emrick:
You got it. Absolutely. Especially when you start looking at a donor advised fund or something like that where you’re maybe gifting a bunch of stock at the beginning and you’re keeping it invested and it’s growing over a three or five year period. Well, hey, that growth is more opportunity for you to gift down the road right within the account itself. So a lot of ways to do your gifting to start thinking about it. A lot of it is obviously tax focused. Certainly it can trickle down into your investments when we start talking about gifting stock that you’ve held for a number of years. There could be some added benefits to that as well as you think about your overall portfolio construction, but certainly should be a big part of your retirement plan if it’s important to you and you want to continue to do this, right?
Because gifting changes for everybody, Walt, I mean, some people get … Hey, when you go into retirement, if you tithe off of a certain amount of income, people treat that income number differently. So these conversations are very specific to the families and the individuals that you work with as an advisor. And understanding it just puts us in a better spot to give you better advice.
Walter Storholt:
You, in a short episode, outlined a lot of variables to this decision making process. What’s your AGI? Do you standardize or take itemized reductions-
Tyler Emrick:
Itemized, yep.
Walter Storholt:
… your age, your RMD situation, your other tax planning concerns and issues, the amounts-
Tyler Emrick:
True.
Walter Storholt:
… just all of those different things affect this answer.
Tyler Emrick:
All of them.
Walter Storholt:
So never bad to give and we’ll always want that to be the central part of it, but if we can do it more efficiently, why wouldn’t we want to do that? That’s the moral of the story.
Tyler Emrick:
You got it. Yeah.
Walter Storholt:
Okay. Very cool. Well, hey, this is the part of the planning process that Tyler and the team at True Wealth Design take you through. And so if you’d like to have that one-on-one conversation, not only where you dive into how you’re going to get to retirement, through retirement, answer all the questions that surround your financial future, but dive into things like this too, planning strategies around gifting, RMDs, we touched on that, so many other moving parts as well. It’s all part of the process. So if you’d like to see if you’re a good fit to work with the team, all you have to do is click the link that’s in the description of today’s show or go to truewealthdesign.com and click the Let’s Talk button. You’ll be able to schedule about a 20-minute discovery call with an experienced wealth advisor on the team, and you’ll be able to see, again, if you’re a good fit to work with one another, where some of the planning gaps might be in your financial life and what are the best ways to start solving some of those things.
So take that opportunity, click that link in the description, set up that time to visit at your convenience and have that conversation. Tyler and the team work with folks all across the country, so no matter where you are, don’t hesitate to reach out.
Tyler, thanks for the help today. Really appreciate it. Great topic and conversation, and we’ll talk again soon.
Tyler Emrick:
You got it. We’ll catch you on the next one.
Walter Storholt:
All right, very good. That’s Tyler. I’m Walter. We’ll see you next time right back here on Retire Smart.
Speaker 4:
Information provided is for informational purposes only and does not constitute investment, tax, or legal advice. Information is obtained from sources that are deemed to be reliable, but their accurateness and completeness cannot be guaranteed. All performance reference is historical and not an indication of future results. Benchmark indices are hypothetical and do not include any investment fees.