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Donor advised funds

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  • Avatar Simsima 
    Participant
    Status: Physician
    Posts: 22
    Joined: 05/07/2018

    Hi guys,
    I am a w2 hospitalist in Texas and i made a little over 400k last yr but 60k was 1099 income with locums and i was able to open a solo 401k and put 9k in there.
    This helped with my taxes alot.
    This year, i have not done any locums but i have picked up alot of extra shifts at my current shop so income will still be approx 400k but only w2.

    Im looking into putting 20-25k in DAF and to charity over the years. My property tax will be 8k this yr.

    So….what the the best place to open it for me to have good investment options and be able to contribute small amounts like 100 bucks to charity at a time and no minimal balance.
    2. Do you guys wait at the end of the year and run the numbers b4 opening it?

    Any other advise appreciated.

    #227985 Reply
    Avatar artemis 
    Participant
    Status: Physician
    Posts: 534
    Joined: 12/02/2016

    So….what the the best place to open it for me to have good investment options and be able to contribute small amounts like 100 bucks to charity at a time and no minimal balance.

    Click to expand…

    You’re basically looking at either Fidelity or Charles Schwab for your DAF provider.  Vanguard’s DAF contribution and grant minimums are too high for you, but both Fidelity and Schwab allow you to open an account with as little as $5,000, and make grants to charities for as little as $50.  (There are other DAF providers, including many community foundations out there, but they generally also have either higher minimums or other restrictions on how the money is to be used that make them less idea for you.)

    #227987 Reply
    Liked by Simsima
    Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 428
    Joined: 06/12/2017
    So….what the the best place to open it for me to have good investment options and be able to contribute small amounts like 100 bucks to charity at a time and no minimal balance.

    Click to expand…

    Fidelity Charitable has a great DAF program: https://www.fidelitycharitable.org

    Their minimum initial contribution is $5,000. After that, there is no minimum account balance and no minimum contribution amount. Their minimum grant amount is $50.

    Their annual expenses and fund expenses are very reasonable. My physician clients for whom I’ve set up a Fidelity Charitable DAF have had great experiences. The especially like the Gift4Giving feature where they can select the amount of the gift and then allow their children to choose the charity they would like to support. They say it’s a great way to begin teaching kids about giving and letting them discover their own causes they are passionate about.

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    https://ProsperousPhysician.com | (717) 496-0900

    #227990 Reply
    Liked by artemis, Simsima
    FIREchief FIREchief 
    Participant
    Status: Other Professional
    Posts: 46
    Joined: 12/10/2017

    +1 on the Fidelity Charitable DAF recommendation.  We’ve used Fidelity for close to ten years.

    I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

    #227992 Reply
    Avatar Simsima 
    Participant
    Status: Physician
    Posts: 22
    Joined: 05/07/2018

    Thank you guys very much for your help. Has any one of you been in this situation before? What potential mistakes would you caution me against?

    #228007 Reply
    Avatar Simsima 
    Participant
    Status: Physician
    Posts: 22
    Joined: 05/07/2018

    Going with Fidelity 🍻

    #228013 Reply
    Liked by FIREchief
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7748
    Joined: 01/09/2016

    Has any one of you been in this situation before? What potential mistakes would you caution me against?

    Click to expand…

    Yes, with clients. A few thoughts:

    1. Don’t wait until too late in the year to open the account (i.e., before last week of December) or the transfer may not go through on time, especially if contributing per #2 (next)
    2. Deposit appreciated stocks rather than cash, if possible
    3. Run a tax projection to see how much you need to deposit to get specific tax breaks or get to a lower bracket
    4. Bunch contributions; contribute 4 – 5 years of planned donations to your DAF in a single yr. then wait 4 – 5 years until you do it again.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    Avatar artemis 
    Participant
    Status: Physician
    Posts: 534
    Joined: 12/02/2016

    Has any one of you been in this situation before? What potential mistakes would you caution me against?

    Click to expand…

    Yes, with clients. A few thoughts:

    1. Don’t wait until too late in the year to open the account (i.e., before last week of December) or the transfer may not go through on time, especially if contributing per #2 (next)
    Click to expand…

    I’ve found summer to be the best time to make contributions to my account, as that seems to be the least busy time at Schwab (where I have my own DAF) and there’s no danger of missing an important tax deadline if the contribution takes longer than usual to clear.  The OP can open an account at Fidelity now, and then fund it later after he’s done the number-crunching you recommend, or toss $5,000 in now and more later (which will mean two tax forms rather than one, but that’s no big deal).

    #228030 Reply
    Liked by Simsima
    Avatar Simsima 
    Participant
    Status: Physician
    Posts: 22
    Joined: 05/07/2018

    Thanks once again.

    #228031 Reply
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3338
    Joined: 01/21/2016

    I have had a Fidelity DAF for 12-14 years and highly recommend it. Like @JFox said, I strongly suggest batching your contributions in order to maximize the tax deduction.

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #228040 Reply
    Liked by Tim, Simsima
    Rogue Dad, M.D. Rogue Dad, M.D. 
    Participant
    Status: Physician
    Posts: 963
    Joined: 03/07/2016
    Bunch contributions; contribute 4 – 5 years of planned donations to your DAF in a single yr. then wait 4 – 5 years until you do it again.

    Click to expand…

    Or wait until the next tax law threatens deductions even more and bunch them before law goes into effect.  I opened my DAF end of 2017 before TCJA came in and threatened my itemized deductions.  Honestly not sure I would’ve opened one at that point otherwise, though I do like the simplicity of it.  It’s great being able to log onto an app on my phone and in a few moments send a donation to the organization I want, having someone else do the work of making sure they get the $, and simplifying my tax paperwork.

    I still can itemize w/o DAF contributions due to my too-big mortgage giving me enough interest to get over the threshold (in addition to SALT), but at some I’ll reach a point where bunching just to be able to itemize will be a consideration  for me.

    Why We’re Not Donating to Charity in 2018

    http://www.RogueDadMD.com

    An alt-brown look at medicine, money, faith, and family

    #228059 Reply
    Liked by Simsima, Tim

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