The Tax Implications of Gift-Getting and Gift-Giving, Ep #129

<p>How do you gift money to individuals without getting hit with having to pay taxes on the gift? How do you make withdrawals if you’re gifted a beneficiary IRA? What is the most tax-efficient way to carry out charitable giving? These are just a few of the questions that I’ll answer in this special end-of-the-year episode of the Retirement Made Easy podcast!</p> <h2>You will want to hear this episode if you are interested in...</h2> <ul> <li>[1:26] Submit questions at RetirementMadeEasyPodcast.com</li> <li>[2:19] Why pension lump sums are declining</li> <li>[6:50] Gifting money to individual people</li> <li>[14:36] Example #1: The Mega Backdoor Roth</li> <li>[16:48] Example #2: Withdrawing from a beneficiary IRA</li> <li>[18:57] Example #3: Giving with donor-advised funds (DAF)</li> </ul> <h2>Gifting money to individual people</h2> <p>I’ve heard many people say they don’t want to gift someone money because they’ll have to pay taxes on it (or because the gift receiver will have to). That doesn’t have to be the case! If you wanted to give a friend or family member money, the annual individual limit is $16,000 for 2022. </p> <p>So a married couple can each give $16,000 to one individual, totaling $32,000. You can certainly gift more, but $16,000 is the annual limit you can give one individual without filling out a <a href="https://www.irs.gov/pub/irs-pdf/f709.pdf" target= "_blank" rel="noopener">gift tax form</a> that gets filed with your taxes. Many people gift up to that amount so they can avoid paying taxes. </p> <p>There’s also something called a lifetime gift exemption. That means you can gift someone a maximum lifetime amount of $12,060,000 to another person. The gift form helps you keep an account of what you’ve gifted someone over your lifetime. What <em>can’t</em> you gift? What happens if you loan someone money they don’t pay back? Listen to find out! </p> <h2>Withdrawing from a beneficiary IRA</h2> <p>I worked with a couple where the wife inherited her mother’s IRA. Because it’s an inherited IRA, she has