Year-End Philanthropic & Charitable Reminders
By Ben Barchilon, CPA
Versant Capital Management’s holistic family office approach integrates investment portfolio strategies, wealth management, income tax planning, estate and transfer planning, asset protection, next-gen financial education, family governance, and business succession planning.
With year-end fast approaching, there are several things to consider on the income and estate tax planning fronts.
Qualified Charitable Distributions (QCDs)
Taxpayers aged 70½ or older can make QCDs of up to $108,000 per individual in 2025 from a Traditional IRA. For married couples filing jointly, up to $216,000 may be given to charity and excluded from adjusted gross income, provided each spouse contributes from their own IRA. QCDs can also satisfy required minimum distributions (RMDs), which begin at age 73, and do not require itemizing deductions.
Annual Exclusion and Exemptions
The annual gift tax exclusion is $19,000. Each individual may transfer up to $19,000 per person per year to any number of beneficiaries (family or otherwise) without incurring gift tax or using any available applicable lifetime exemption. Married couples may give $38,000 per recipient through a gift-splitting election or by using community property.
Educational Funding
Contributions to a 529 college savings plan are treated as gifts for federal tax purposes and fall under federal gift tax rules. Most families won’t owe gift tax thanks to the annual gift tax exclusion. If your total gifts to an individual stay within the annual limit, no gift tax is due. Many states also offer a state tax adjustment for 529 plan contributions.
To give a 529 plan a strong start, consider super funding (or front-loading), which allows contributions of up to five years’ worth of gifts at once without triggering federal gift taxes. In 2025, that equals $95,000 per beneficiary (or $190,000 for married couples) in a single year, based on the $19,000 annual gift tax exclusion multiplied by five. This approach provides more time for tax-free growth, making it a powerful tool for long-term education planning.
- Coverdell Education Savings Accounts (ESAs) are tax-advantaged trust or custodial accounts for qualified education expenses, from K-12 tuition to college. Annual contributions are capped at $2,000 per beneficiary and are not tax-deductible.
- Custodial Accounts (UGMA/UTMA) are investment accounts opened by a custodian (typically a parent) for a minor. They offer broad investment options and flexible fund use, no income or contribution limits, and can be used for any purpose once the child reaches adulthood.
Year-End Health Care Reminders
Health Savings Accounts (HSAs)
HSAs are available to participants enrolled in high-deductible health insurance plans. At the federal level, contributions to HSAs are tax-free, with 2025 limits of $4,300 for individual coverage and $8,550 for family coverage. A $1,000 catch-up contribution is allowed for those 55 or older. Contributions to HSAs can no longer be made after enrolling in Medicare (eligibility for Medicare begins at age 65).
Distributions are tax-free when used for qualified medical expenses. An advantage of an HSA is that there are no annual distribution requirements, time limits on use, or required account termination. These factors theoretically allow the HSA to grow in perpetuity, making it a powerful retirement-planning tool.
Investors who can afford to do so may choose to pay current medical expenses out of pocket and allow their HSA contributions to remain invested and grow tax-free until retirement. In retirement, the HSA can be used for qualified medical expenses, providing a potential source of triple-tax-free income.
As 2025 advances, careful review of your tax situation and proactive adjustments can help align your wealth plan with your long-term goals, reduce surprises, and maximize opportunities available under current law.
Ben Barchilon, CPA, is a wealth advisor at Versant Capital Management, where he advises families in developing tax-efficient strategies to reach their goals. Ben has experience working with small business owners, multi-generational wealth, and families from diverse backgrounds.
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