Year-End Giving Strategies for University Faculty and Staff
’Tis the season for giving. Whether you’re thinking about gifts to family or to charity, this year or in the future, there are a few things to keep in mind.
Gifting to Family or Individuals
Each year, the IRS sets an annual gift-tax exclusion amount. In 2026, it is $19,000 per person. Meaning, if you and your spouse have three children, you and your spouse can give each child $19,000, totaling $114,000 without having to file a federal gift-tax return (Form 709). If your gifts to an individual exceed the annual exclusion, you may be required to file IRS Form 709, and the excess may use a portion of your lifetime federal gift and estate tax exclusion. Consult a financial professional about the pros and cons of surpassing the annual gift-tax exclusion amount. The gift could be cash, stocks, property, 529 contributions and more.
A 529 plan is a popular way to set aside money for education. Contributions and earnings generally can be withdrawn federal income-tax free when used for qualified education expenses. You can use the money for qualified expenses at eligible colleges, universities, trade schools, and certain K-12 schools. Contributions to a 529 plan generally count towards the annual gift-tax exclusion for gifts to the beneficiary. Your state might even have a state tax deduction for contributions made to in-state 529 plans.
As of 2024, certain unused 529 funds may be transferred directly to a Roth IRA owned by the beneficiary. Among other requirements, the 529 account generally must have been open for at least 15 years. Annual transfers are limited by the applicable IRA contribution limit and the beneficiary’s eligible compensation, and certain recently contributed amounts are excluded.
A $35,000 lifetime limit applies to these transfers. If you want to help with education costs, you can pay tuition directly to the school on someone’s behalf. These payments generally don’t count against your annual gift-tax exclusion. This exception applies to tuition, not expenses such as room, board, books, or supplies.
Gifting to Charities
If you are age 70½ or older, you may be able to make a qualified charitable distribution (QCD) directly from an IRA to an eligible charity. A qualifying QCD can generally be excluded from your taxable income. If you are subject to required minimum distributions (RMDs), it may also count toward your RMD for the year.
If you know how much you’d like to give but aren’t sure which charities to support, you could contribute to a donor-advised fund (DAF). A DAF may provide a potential tax benefit in the year you contribute, while allowing you to hold the money in the account until you are ready to recommend gifts. Once the money is in the DAF, it can only be used for charitable purposes. You can contribute cash or appreciated stock from an after-tax account.
Donating long-term appreciated stock directly to a DAF may allow you to avoid recognizing the embedded capital gain and claim a charitable deduction, provided the applicable requirements are met.
If you don’t plan to make gifts right away, you can reinvest the funds within the DAF. If you plan to give soon, the assets within the DAF may be held or invested based on the options available through the sponsoring organization.
Tax Changes That May Affect Your Gifts
Two changes from the One Big Beautiful Bill Act, signed in 2025, apply beginning with the 2026 tax year:
- If you itemize, charitable contributions are now subject to a 0.5% of adjusted gross income (AGI) floor. For example, with an AGI of $300,000, the first $1,500 of otherwise deductible contributions would not produce an itemized charitable deduction.
- If you take the standard deduction, you may be able to deduct up to $1,000 of qualifying cash contributions to certain qualified organizations as a single filer, or up to $2,000 if married filing jointly.
There are also IRS limits on how much you can deduct in a single year, based on a percentage of your AGI and the type of gift (cash or non-cash). If your gifts exceed those limits, you can generally carry the unused amount forward to future years.
Before You Give
A thoughtful plan can help you give in a way that reflects your goals and values. Before you make a gift, a tax professional can help you see which rules may apply to you, and a financial advisor can help you decide which strategies fit your goals. Planning ahead can help you understand your options before you give.
Savant University Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois, serving clients in academia nationally. Our advisers have specific and in-depth knowledge about university employee benefit programs and retirement plans. We work with university faculty, physicians, and other professionals. We are not associated with any university, or any retirement vendor and we have no access to your private retirement or personnel information. Past performance is not indicative of future results. Different types of investments involve varying degrees of risk. A copy of our current written disclosure Brochure discussing our advisory services and fees is available upon request or at www.savantwealth.com.
Lillie F. Perry
Financial Advisor
CFP®