MtM Financial Advisor, Alyssa Young, wrote this column for publication in the August 2021 Holy Cross Lutheran Church newsletter.
Investments as Gifts
As we prepare our hearts for the celebration of Christ’s birth, we’re also preparing our shopping lists. Choosing a thoughtful Christmas gift for every loved one on your list can be challenging. To give a meaningful gift that will make a lasting impact, consider gifting investments. With just a little upfront effort, you can make a tremendous difference in someone’s future.
You can create and/or contribute to an investment account that’s designed to grow for a future goal. Once it’s set up, you can make contributions for every holiday or occasion when you’d give a gift, such as Christmas, birthday, Easter, graduation or anniversaries. This makes it much easier to check off one more thing from every holiday to-do list!
With time and the power of compounding, any investment, large or small, has the potential to grow into a significant asset. You’ll feel blessed to be a blessing in your loved one’s life.
An individual can give up to $15,000 per person per year without needing to file any paperwork. Otherwise, a gift tax form (IRS Form 709) may be required when filing your income tax return. On top of the $15,000 annual exclusion, you get an $11.7 million lifetime exclusion per person.
Giving a child an early start in the world of investing is incredibly insightful. One way you can accomplish this is by opening a custodial account. Minors cannot own their own accounts, so a trusted adult serves as the custodian until he or she reaches 21 years of age. However, the minor’s Social Security number is used on the account.
A savings account at a bank, a brokerage investment account or, if the child earns income, an individual retirement account such as a Roth IRA all are good options. You could deposit money and invest it on the child’s behalf or involve the child in making investment decisions.
Another way to support a child financially is to contribute to a Section 529 college savings plan. Your contributions are invested to grow to support the beneficiary’s education. The money they use is free of federal tax as long as it’s spent on qualified expenses such as tuition, room and board and textbooks.
There are several ways to give an adult a stronger financial future. For example, you can open an account he or she inherits as a beneficiary upon your passing. If you use a retirement account (a Roth or traditional IRA), your beneficiary will need to take the money out of the account within 10 years of inheriting it.
If you open a joint account in his/her name(s) along with your own and contribute to it, your loved one retains ownership when you die.
Alternatively, you can transfer shares of a security you already own to his or her existing brokerage account.
Making a donation to a charity in your loved one’s name is another thoughtful, meaningful gift.
Alyssa Young, a Holy Cross member for more than 30 years, is a financial advisor at MtM Financial Group in Lower Nazareth Township. You can reach her at 610-746-7007 or by email at [email protected].
Securities offered through The Strategic Financial Alliance Inc. (SFA), Member FINRA, SIPC. Advisory and tax services offered through MtM Financial Group, LLC which is otherwise unaffiliated with SFA. 4505 Hanoverville Road, Bethlehem, PA 18020. SFA does not provide tax or legal advice. Supervising office 888-447-2444.