Your 2024 guide to holiday giving

As the holidays approach, many of us are eager to make the season bright by giving to loved ones and those in need. Here are some financially smart strategies to help you support the people and causes you value most.

Giving gifts to family members remains a cherished part of the holiday routine, and the chance to reconnect may have you considering how to best give to your family. These simple questions can help:

• Do you want to give family members a financial gift? If so, remember that you can give up to $18,000 per individual this year without having to file a gift tax return ($36,000 if married and electing to split gifts). However, gifts exceeding $18,000 per individual count against your lifetime gift and estate tax exemption of $13.61 million (and $27.22 million per married couple) in 2024.
• Does your loved one need money to pay bills or fund other necessities?
  • If Yes: Do they need it more this year than other years? Should you increase the amount? This might be the year to think closely about how your generosity can best help.
  • If No: Are they saving toward something (education, a house, a passion project) that you could contribute to? If you know a loved one who struggles to save, funding an initiative directly, such as college tuition which is not subject to the gift tax limitations, might make a great gift.
• Have you considered opening or contributing to a 529 education savings plan?  You can help someone you care about save for college through a 529 plan, a tax-advantaged way to invest for future education expenses. Earnings grow tax-free, and as long as you use the funds for qualified education expenses, withdrawals are generally exempt from tax.¹ Anyone, including grandparents, can contribute up to $18,000 per year ($36,000 for married couples electing to split gifts) to any individual’s 529 plan per beneficiary, without reducing one’s lifetime federal gift and estate tax exclusion amount. In addition, you can bundle five years of contributions into one $90,000 contribution ($180,000 for married couples electing to split gifts) per beneficiary, provided you make the required election on a gift tax return for the year of the contribution.

Giving can be good for you, offering a sense of purpose, community, and helping to make a difference. Here are a few ways to give back to others in need:

• You can also donate stock from your E*TRADE brokerage account. To do this, go to E*TRADE’s forms and applications page.
• If you’re age 70 ½ or older, consider donating your individual retirement account (IRA) distribution to charity. If you’re at least 70½ and are the owner of an IRA or Inherited IRA, you can usually make a Qualified Charitable Distribution (QCD) to an eligible organization of up to $105,000 per year, indexed for inflation for tax years after 2023, directly from your Individual Retirement Account (IRA). QCDs generally come with no tax costs to you or the charity receiving the donation—allowing you to count a QCD toward your required minimum distribution for the year, if certain rules are met, and reduce your taxable estate and feel good about supporting a cause you care for.³
• Contribute to a donor advised fund (DAF), such as the Morgan Stanley Global Impact Funding Trust (MS GIFT). When you donate to a DAF, you may take a federal income tax deduction in the year the donation is made, subject to certain limitations.² The assets donated to the DAF can then stay invested and potentially grow, tax-free, until you recommend which charities you want to receive a cash donation, giving you and your family time to decide where your gift could have the greatest impact.

           Moreover, if you’ve been investing for a while, you may hold securities that have appreciated            significantly. Donating appreciated securities may help to reduce the potential tax hit from            capital gains that you might otherwise incur by selling the securities and subsequently            donating the cash.