Rob West Generosity often begins with good intentions, but how do we turn those intentions into action? Hi, I'm Rob West. Many Christians genuinely want to give, but generosity doesn't always happen as intentionally as we'd like. Today, Kendra Vandermeulen joins us to explore how a thoughtful giving strategy can help us make the most of what God has entrusted to us. And then it's on to hear calls at 800-525-7000. This is Faith and Finance on American Family Radio, biblical wisdom for your financial decisions.
Rob West Kendra Vandermeulen is the CEO of the National Christian Foundation, or NCF, the nation's largest Christian donor-advised fund provider, and an underwriter of this program. For more than four decades, NCF has helped Christians put their generosity into action. Through its giving fund, thousands of believers have helped direct more than $25 billion to over 100,000 churches and charities. Kendra, what a treat to have you on the program.
Kendra Vandermeulen Thanks, Rob. It is so great to be here.
Rob West Well, we've been looking forward to it. Let's start, Kendra, with the gap between intention and action. Many Christians genuinely want to be generous, but following through isn't always easy. So maybe you could just share what you think keeps people from turning that desire into real action.
Kendra Vandermeulen Yeah, giving can be overwhelming. There are so many choices, so many different things to consider in terms of what to give, how to give, when to give, where to give. And without a strategy, competing needs and giving requests can become overwhelming.
Rob West Yeah.
Kendra Vandermeulen Our giving just becomes reactive at that moment, and we don't know how to say yes and no. And do that with grace, which is what we really want to be able to do. So having a giving strategy, a plan that has all the right facets to it, can help us step back and be more purposeful in where and how we give and when.
Rob West Yeah, I think that's well said. And I want to dig into the specifics on what that can actually look like. So if we want to move away from just being reactive givers to having more intentionality, what does it look like to develop a more intentional plan for our generosity?
Kendra Vandermeulen It all starts with a biblical foundation. Starts by exploring what scripture teaches about money and about stewarding God's resources and about giving in particular. Proverbs says in 3:9, "Honor the Lord with your wealth and with the first fruits of all that you produce." So we need to clarify what our calling is to give, the causes, the needs that bring us joy, that break our hearts, or compel us to get involved. We need to think about the resources that God's placed in our hands, how he might use those, and what expectations he has for us as managers of his resources. And we don't have to do the whole strategy all at one time. We don't need to be paralyzed by the desire for perfection, because perfection's never going to come in this matter, but we can take one faithful step at a time to get better and better at it.
Rob West Mm, yeah. I love that idea of thinking about what breaks our heart and the causes and needs that bring us joy to be a part of solving and participating in, as you said, that challenge our heart. I think that's a great place to begin, and this idea of having a strategy underneath all of that, I think is so essential. Now, NCF of course encourages people to think beyond cash, which is how we do most of our giving, but it's not where our real wealth exists. So before the break here, what are just some of those assets people might overlook that could open the door to even greater giving?
Kendra Vandermeulen Yeah, 90% of our giving comes from our checkbooks, but 90% of what God's entrusted to us is not in our checkbooks. And where is it? Well, it can be found in all kinds of assets that are on our balance sheet rather than cash. Those assets include stocks and bonds, but they also include parts of our family business or the real estate portfolios that we've developed over the course of our career. Real estate, private investments, retirement assets, other non-cash assets, these all have incredible strategies when used well to provide opportunities for generosity.
Rob West Yeah. Well, we're going to continue to unpack those after the break, and we'll talk about the importance of giving before selling and how there are real tax benefits there. We're also going to dig into the donor advised fund, which you might think about as a charitable checking account, what NCF calls a giving fund, and how that's become a really popular tool for charitable giving. We're joined today by Kendra Vandermeulen, CEO of NCF, and more on giving intentionally after this break. Stick around.
SEGMENT 2
Rob West We're talking about turning good intentions into generosity. I'm joined today by my friend Kendra Vandermeulen. Kendra is CEO of the National Christian Foundation, or NCF, the nation's largest Christian donor-advised fund provider. We share a founder at Kingdom Advisors and NCF in Ron Blue, among others, Larry Burkett and Terry Parker, and NCF is an incredible partner serving so many givers. And Kendra, it's just amazing to see the sheer volume of dollars flowing through NCF into incredible ministries and perhaps that's something that's misunderstood is that NCF is not there to decide where the money goes, it's really to just help facilitate the giving, right?
Kendra Vandermeulen Yes, it's such a privilege to help some givers be wise stewards of what God's entrusted to them. And the fruit that flows out of that is just such a blessing. And it is true that we are a conduit. We exist to help them facilitate the resources that they have towards the gifts that they want to make. We do not make any grants to any charities out of anybody's fund. We only make grants when they recommend one and we're able to make that grant at their request.
Rob West Yeah, you can learn more folks at faithfi.com/NCF. Their work in complex gifts, asset-based giving, and certainly donor-advised funds, what they call a giving fund, is second to none. Again, faithfi.com/NCF is the place to go. Now, Kendra, before the break we were talking about non-cash giving, and you made a staggering statement that I think a lot of people miss, that 90% of our giving is done in the form of cash, and yet only 10% of our wealth, on average, is held in the form of cash, which means our greatest opportunity for giving isn't in our savings and checking accounts, it's over there on our balance sheet. It's the assets that we have, the investments and the businesses and the real estate. I want to talk about why it's important to think about generosity before a major financial event like selling a business or real estate or other appreciated assets.
Kendra Vandermeulen Yes, timing can be really critical. If you're considering a sale, charitable planning before that transaction will help us help you decide what can ultimately go to charity and what has to go to taxes. Giving ahead of the sale can help you increase the amount that's available for charitable giving at the expense of your taxes, but that has to be done in a legal and thoughtful way in order to accomplish your goals. So, depending on your circumstances, you can have very favorable tax treatment, but every situation is different. And so we need to look at those things early and often. We need to involve your tax team, your financial advisors, and we need to do a fair amount of planning in order to make these things happen. And the sooner we start, the better.
Rob West Mm, yeah, I'd love for you to unpack that a bit more. You mentioned the importance of having advisors, you mentioned the importance of NCF being there to work alongside you. Anything else that someone needs to know about who they should involve early in the planning process before making a major sale?
Kendra Vandermeulen Well, it really depends on what it is they're going to be selling. Sure. So if they're selling the family business and this is the primary asset of an extended family, then your family needs to be involved in that conversation. It's usually part of a larger plan to both transition the business and make sure that it lands well for the sake of all the customers and the employees and all of the different stakeholders of the business, but also that the assets land well for the family and what the family's larger goals are. So often if you've already given a lot of thought to that and involved your family or extended family in those conversations, such that together you have a vision for where you would like to see the impact from the assets that God's entrusted to you, then together you can come up with a plan of how much to give, how much to save, and where to send it. And over what time horizon.
Rob West Yeah, that's well said. Kendra, of course, we're here in late October, the end of the year is coming, is there still time for some of these asset-based gifts to occur at this point?
Kendra Vandermeulen There is still time. So, it is possible depending on what kind of asset you have to make these decisions into December. But there are some assets, real estate in particular being one of them, where the later it gets, the harder it gets. And so we have a set of actual deadlines for when we need to know at least know about a particular gift depending on the type of gift, and those deadlines are available on our website.
Rob West Great. Again, faithfi.com/NCF is the place to go. All right, Kendra, I want to talk about the donor-advised fund. This is of course become a really popular tool for charitable giving. How can they help people become more intentional and even strategic with their generosity?
Kendra Vandermeulen Yeah, one of the real big benefits of a donor-advised fund is it allows you to make a gift, get the taxes all straightened out on that gift, so get your deduction and understand where it's going to land with regard to a tax outcome, and then take some time to decide where you want to give. So it separates the tax planning from the gift planning, if you want to call it that, the planning of the giving. And that is so helpful to people because in situations like this where we're dealing with what we call complex assets, we're called them complex for a reason. They're not easy. And so we want to make sure we can concentrate all of our efforts on the front end on all that great planning to make sure that the business lands well as I mentioned earlier, and all of the taxes are paid and all of the things that they wanted to accomplish on the front end are handled, and then they can get into the question of when and where and how to make the actual grants.
Rob West Again, folks, NCF calls the donor-advised fund a giving fund. You can open one in just a few minutes at faithfi.com/NCF. And I think it's one of the most powerful giving tools available, and Kendra mentioned a few of those benefits. Another benefit is just this idea that you can you know make the gift to many ministries out of the donor-advised fund once it's funded, and you only get one tax statement. You're not keeping up with all of those contribution receipts, which is just so helpful. Kendra, when it comes to the donor-advised fund, because often it's being funded maybe with the sale of an asset and funded at a significant level, oftentimes folks are not ready to deploy those resources right away, they can actually invest the money in a faith-aligned way right in the giving fund, right?
Kendra Vandermeulen That is correct. We tend to think of this as the grow part of the value proposition. So donor-advised funds talk about three steps or three values that a donor-advised fund can bring: give, which is what we've talked about in terms of the planning on the front end; grow, which is what you just mentioned, where I'm investing these assets in a faith-driven way in our case, in order to grow them over time; and then grant, which is where I'm deciding exactly which charities are going to receive how much and when. The investment options that we provide are run the gamut from cash investment options that provide interest rate returns to stock or bond or fixed income or equity types of investments all the way to alternative investments. So there's a lot you can do with your giving fund once you've funded it.
Rob West Incredible. Well, Kendra, we've covered a lot of ground here today. So thankful for our partnership with NCF and for your time today.
Kendra Vandermeulen You are so welcome. Thanks for having me.
Rob West That's Kendra Vandermeulen, CEO of the National Christian Foundation. If you want to learn more, a quick way to get to their website is just to go to faithfi.com/NCF. That's faithfi.com/NCF. We'll be right back.
SEGMENT 3
Rob West So thankful to have you with us today on Faith and Finance here on American Family Radio. What a treat to have Kendra Vandermeulen in the studio today, CEO of NCF. Don't miss this opportunity, folks, to set up your donor-advised fund. I think really everyone needs one. Think of it like a charitable checking account. It has some powerful tools for your giving. If you want to do bunching—meaning you get a bonus, and maybe you want to do a couple of years' worth of giving at once to get above the standard deduction and then grant it out over time with a few clicks of a button. Maybe you want to make a gift of appreciated stock or some other asset to avoid capital gains. You don't quite know where you want to give the money? Well, the donor-advised fund is the vehicle to do it. You give it to the donor-advised fund, which is yours, controlled or held by the donor-advised fund sponsor, but your account that you open, when you give that asset or a portion of it—you don't have to give the whole thing—it can then be sold in the donor-advised fund. That means no capital gains. The donor-advised fund is now funded with cash upon the sale. You get the contribution receipt for the full amount, and perhaps that's what allows you to get above that standard deduction, then you give it out as the Lord leads. You log into your donor-advised fund, your giving account at NCF, you pick your charity or your church or the other ministry you want, you click a button, and the check is gone. You can do it anonymously or in your name, that's your choice. It's quick and easy. Again, it's called a giving fund, and you can open one in five minutes today when you go to ncfgiving.com. That's ncfgiving.com.
Rob West All right, in just a few moments we're going to begin taking your questions today. So here's my question for you: What is that one thing you've been considering in your financial life? You've been thinking about it, wrestling with it, and you're just needing another source of counsel before you make the decision, something you're stuck on. Maybe that stuck thing is that debt that you just can't make any progress on. Maybe you're stuck with spending, trying to balance the budget. Maybe you're stuck with how much do I leave to my kids and what impact might that have. By the way, our brand-new field guide, How Do I Prepare the Next Steward? is out. Well, almost. It's here, it's in our warehouse. Our team is getting ready to launch it. It will be on the site any day now, and we're going to have a special launch with an opportunity to secure your field guide at 50% off one day only. We'll tell you when it's coming. But we're so excited about this new tool that will allow you to pass spiritual, character, relational, and financial wealth to the next generation. It's going to give you that biblical perspective. It's going to give you those exercises in each of those four areas to lean into, and then some case studies of others that have gone before you. And so we can't wait to put it in your hands. It's field guide number two, and it's out any day now. We'll let you know.
So, maybe that's your burning question today: How much do I leave to my heirs? Maybe you have a wayward child and we're praying for that child, you're fervently praying for the Lord to draw them unto himself, for the scales to drop, for them to see their need for a savior. But you're wondering, while you're praying through that, what do I do? If the Lord were to call me home, does $X in their hands tomorrow or a year from now, is that a good thing? Would it draw them closer to the Lord, would it accelerate their walking away from the Lord? How do I wrestle through that? Maybe that's your question today. Whatever's on your mind, here's the number with lines open: 800-525-7000. That's 800-525-7000. Our team is standing by. We're going to dive into those questions here in just a moment, so any financial question, now is the time to call: 800-525-7000.
Rob West In the news today, you might think earning half a million dollars a year would bring peace to your finances. But a Goldman Sachs survey found that nearly 37% of Americans earning more than $500,000 annually say they're living paycheck to paycheck. Even more surprising, 46% make only minimum payments or less on their credit cards, and 80% have delayed major financial goals. Now here's the reality: for many, as income increases, so do expenses. Bigger homes, nicer cars, more expensive lifestyles can leave even higher earners feeling financially stretched. I know, it's hard to believe if you're not in that, you're not in that spot, you might think, "If I had a half a million dollars, that would not be a problem." Nevertheless, the data says otherwise.
This reveals, of course, the deeper issue. There's always the issue beneath the issue, right? Money, Ron Blue often says, is like an iceberg. The 10% above the waterline is the money management, it's the things we do with the money that we can see tangibly, but the 90% of the mass of the iceberg below the waterline are the values, the why, what it's doing to our hearts, how money intersects with the human heart, which we know money issues are heart issues. And so what the deeper issue is, is that more money can't fix what hasn't been addressed in the heart. Ecclesiastes 5:10 reminds us that whoever loves money never has enough. If we're looking to money for the security, the satisfaction, the peace that only God can provide, no amount will ever feel like enough. And if we haven't learned contentment and stewardship with what we have today—he who has been faithful with a little will be faithful with much, you remember that?—well, then a bigger paycheck won't automatically change that. Here's the reality: true peace isn't found in having more money, it's found in trusting God knowing He is enough, so that money doesn't have to be.
Wow, that's a big idea. One that's easy to articulate, a lot harder to live by, and yet it is true. Jesus is our ultimate treasure, money a powerful and good tool, so long as we don't place it on the throne of our lives.
Now, we don't tangibly do that, right? We would say, "No, of course I wouldn't do that." But in practice and in our thought life, is money the ruler of our lives? Well, that's very easy for that to be the case, especially in the most prosperous nation in the history of the world, and yet we need to be on our guard there. So, hopefully each day on this program we can encourage you and remind you of these truths—I'm talking to myself at the same time—so that we can be found faithful with what passes through our hands. It's not a matter of how much or how little you have, it's what does faithfulness look like today with what I have right now.
All right, after this break we're going to dive into your questions. Call right now, a few lines still remain open: 800-525-7000. We'll be right back, stick around.
SEGMENT 4
Rob West Great to have you with us today on Faith and Finance here on American Family Radio. I'm Rob West. We've got a few lines open. We're taking your questions today on anything financial. Call right now. 800-525-7000. That's 800-525-7000. We'd love to hear from you. We're going to begin today in New York. Maria, we're so grateful for your call. How can I help you?
Maria I am also so very grateful for your program. And the first question I have to—there are two. One is how do you calculate the QCD for your—I'm 71, so I need to take care of that. And number two is how do you vet the organization that you are donating to because sometimes they're corrupt?
Rob West Yes. Yeah.
Maria Those are the two questions and thank you so much.
>> That's very kind, and I'm delighted you called today. Let's start with the first question. You said QCD. Do you actually mean required minimum distribution that you're going to handle through a QCD when you said how do you calculate it? What number are you trying to calculate?
Maria What I'm trying to calculate is, remember, I remember you've spoken, and I think I've spoken with you about it, the connection between the prof—the total, the—the modified the the Maggie, and then the Irma, and then your—your QCDs the only way to balance that off.
Rob West Ah, got it. Yes. Okay. Uh, very good. So, you're not—yeah, you mentioned your uh 72, right? So, you don't have a required minimum quite yet, correct?
Maria Yes, but I'm trying to, you know, already bring my whatever it is down. My, yeah. That's what I'm doing. And I want to do it while I am aware of who I'm giving it to.
Rob West Yes. Yeah, makes sense. I love this idea, Maria, and and what kudos to you for thinking through this at this level. Um, so, yes, a qualified charitable distribution is an excellent way to manage the Medicare IRMAA surcharges by reducing the income Medicare uses to calculate premiums. And, you know, the QCD is a great way to do that. So, the key is to understand the connection between your—what you said, MAGI, the modified adjusted gross income, the IRMA, which is the income-related monthly adjustment amount, and the QCD, we're at alphabet soup here, qualified charitable distribution, and how they work together.
So, uh the modified adjusted gross income for Medicare IRMA purposes, generally, your adjusted gross income, your AGI, is the factor that determines whether or not you will have a surcharge on your Medicare two years later. IRMA is that amount, the additional Medicare Part B and D premium charged when your modified adjusted gross income exceeds certain thresholds, and then the qualified charitable distribution is from an IRA, and that allows it to be excluded from your taxable income.
Now, a QCD, um, you know, can lower AGI, the adjusted gross income, which then lowers the Medicare uh modified adjusted gross income to keep you below the IRMA threshold. So, really, it's going to come down to um what those thresholds are. Are you a single filer?
Maria Yeah, I think for me it's 109.
Rob West Yes, that's right, 109 or less would be once you get over 109, then you're going to add 200 this year at least for 2026 premiums, you're going to add $202.90. So, you need to keep that modified adjusted gross income below 109,000. Um, so that would allow you to, you know, direct some money to charity um from uh dollars you were, you know, normally taking out of your IRA to satisfy your RMD, and instead of doing that, send it straight to the charity, thereby not adding to your taxable income for the year, but also allowing you to satisfy the required minimum such that um, you know, you wouldn't trigger that uh that premium.
Maria Yeah. So excellent explanation. I could follow it now.
Rob West Excellent. Well, I'm I'm glad to hear it. And uh we're we're so thrilled that you're thinking this way, and this is going to allow you to give more uh money to uh to God's purposes through your your giving. So that's great. The second question you asked was related to ultimately uh how do you determine if the organization you're giving to, you know, is worthy of that. And I love the idea that you're thinking about some due diligence before you make a substantial donation. Um, there's several ways to evaluate whether a ministry is trustworthy. Um, one would be an organization called Charity Navigator. Charity Navigator, they have a website, and they review the financial health, they do provide some accountability, uh they evaluate leadership and impact. And so Charity Navigator would be a good one.
The second one that I would mention is ECFA, what people call Ekfa for short. It stands for the Evangelical Council for Financial Accountability. For instance, Kingdom Advisors and Faithfi and American Family Association, we have the ECFA certification, which just simply means we have to meet high standards. We need to have an independent audit every year. We need to, you know, comply with their rules and regulations to get the ECFA seal of approval for financial accountability. Well, ECFA certified would be a great thing for you to require for any ministry you're giving to. Apart from your local church, which typically they won't use the ECFA certification. So, I would say those two things would be a good starting point, Charity Navigator and ECFA.
Now, Jesus taught that we can recognize people by their fruit in Matthew 7. So, I think we would want to ask, does this organization demonstrate biblical integrity? Is the leadership transparent? Does its work genuinely reflect Christ's love and compassion and truth? Is there evidence that the donations are making a meaningful difference? And I realize those questions are more subjective versus the objective measure of the Charity Navigator and the ECFA certification. But I think it is important for you, you know, to look at that.
One other consideration, depending, Maria, on how large the gift is, I think you want to know does the organization have the capacity to manage my gift, and what percentage of the annual budget would it be? Now, that may not be a factor, but in some cases where it's a small church or a small organization or we're making a major gift, we could end up giving something that would be substantial in terms of the total percentage of the budget, and we just want to know that they're prepared for that in terms of they know what to do with it, they're going to manage it wisely, they don't become dependent on it, those kinds of things. But I think from a really practical standpoint, I would probably start with Charity Navigator and the ECFA certification. Is that helpful?
Maria Oh, that's yes, very much so, very helpful because I think what's happening is sometimes you overthink it to the point where you don't do anything for fear that it will go get wasted.
Rob West Yeah, I think that's right.
Maria So, yeah.
Rob West Absolutely. And you know, I think the key idea here is that, you know, we want to handle charitable gifts honorably, and you know, just as we're stewards of what passes through our hands that we spend, we also should be good—also should be good stewards of what we give. Now, at the end of the day, if you've done your part to check these uh you know uh Charity Navigator rating, you look at ECFA, you talk to the ministry, you're evaluating the fruit, at the end of the day, you make the gift and you leave it up to the Lord as to how it's going to be used. But I think there is a role in good stewardship to do your part before you make the gift, and that's precisely what you're getting at.
Lord bless you, Maria. Thanks for calling today. Lorraine, come in your way after the break. Stick around.
SEGMENT 5
Rob West Delighted to have you with us today on Faith and Finance here on American Family Radio. We do have a few lines open, if you've got a question today, call right now 800-525-7000. That's 800-525-7000. We'd be delighted to tackle that burning question you've got in your financial life today, help you think about it in light of biblical wisdom. Let's go out to Texas. Lorraine, how can we help?
Lorraine Hi there, first of all, say thanks so much for your program. It's just I love how you clearly explain things and make it simple to understand, so I appreciate that.
Rob West Well, thank you.
Lorraine My question is about 529 accounts. Basically, the question is, is it possible to transfer the ownership of an account to someone who is not the original beneficiaries? And let me just give you some background. My parents had set up some accounts for their grandkids, and now they want to kind of get out of being in the middle of that or just having those accounts, and they want we, the parents of the grandkids, to own the accounts and then to do with it what we want. Now, we may or may not be actually using them for educational expenses because the kids have grown and, you know, they're we could give them to their grandkids, but my parents want to leave that all up to us. So, um it's kind of complicated, I hope that makes sense. Let me see what you have. Okay, great.
Rob West It does. Yeah. Yeah, and you you've pointed out a really important distinction there because we need to distinguish between the account owner and the beneficiary. So the account owner, which is your what you're referring to, is the person who controls the account, makes the investment decisions and determines the withdrawals. The beneficiary is the person who's qualified educational expenses the money is intended to pay. And so, you know, based on your question here, yes, if the grandparents established the 529 for their grandchildren, they can often transfer ownership of those accounts to the grandchildren's parents without changing the beneficiaries. It's fairly common. And so essentially what would happen is, you know, the the transfer would take place, the beneficiaries could remain unchanged, the money stays in the existing 529s, and then the parents, you and perhaps your siblings, would then now control the investment decisions, the withdrawals, the future account management. In terms of any tax consequences, generally a straightforward change of account ownership, you know, doesn't trigger any kind of tax whatsoever. It it could have gift tax implications where you would just need to report it to the IRS, but it wouldn't be taxable. You know, some states have restrictions or special consequences when account ownership changes, so you may just want to check on that. But essentially what would happen is the grandparent would contact the 529 plan administrator and just ask, can we transfer account ownership from us to the parents of the beneficiaries while keeping the grandchildren as designated beneficiaries? They would provide the appropriate change of owner paperwork and explain, you know, whether the the plan permits the transfer because each plan has their own rules and regulations, although again it it shouldn't be a problem. And then if the grandparents primarily just want to ensure the parents can take it over if something happens, then they could name them as successor account owners, but in your case it sounds like they want them to have full ownership and and that can absolutely be done. Does that make sense?
Lorraine It does, and I just realized as you were explaining that, I failed to include an important fact. Okay, so originally, you know there's we've got seven grandkids, but only four accounts, and those accounts, um, are for different grandkids. So, um I've got so in my case, my parents set one up for my son, it's still got money in it, but that what my parents want to do is divide that account up into four four equal amounts for my for all the siblings, for my siblings.
Rob West Yes. Okay.
Lorraine Does that make sense?
Rob West Yes. So, um they what they want to be able to break it up at the same time that they change the ownership?
Lorraine Right. Right.
Rob West Yeah.
Lorraine And of course the cost basis is different and the cost of earnings are different, so tax implications if they get if it gets withdrawn without being used for educational purpose would be different for all of them.
Rob West Yeah. No, that's right. I mean, hopefully it would be used for qualified educational expenses, um, you know, or taken out based on scholarships or grants on a pro rata basis, and that wouldn't be, you know, needed.
But yes, essentially, they can divide the money in the four existing 529s among all seven grandchildren. They don't need to cash out the accounts or pay taxes. So the important distinction is that transferring ownership and dividing the money among the beneficiaries are two different transactions. So, um you would probably want to open additional 529s, and they could do it or you could do it for the three grandchildren that don't currently have one, and then they would transfer portions of the existing account. So most 529s allow partial transfers to another 529 account for an eligible family member of the original beneficiary, and then keep the money invested because that's a properly structured 529 to 529 transfer, so that avoids any kind of withdrawal whatsoever. And then um, you know, once the funds are divided, then the grandparents could request that the parents, you know, be uh replaced or that they would be replaced by the parents as now owners of the four accounts.
Lorraine Is there any limit to the amount that can be transferred and I'm thinking of the gift I think it's about $19,000 that a family member can make. Is there is there restriction in place for the for the transfer of funds from a 529?
Rob West Uh, yeah, so I mean there's no fixed federal dollar limit on transferring money between 529 accounts. In terms of the gift tax limits, for this year it's 19,000, so a married couple two grandparents could transfer 38,000 to any one individual. Um, you know, the you know, the five-year 529 contribution election, uh, you know, has them it's somewhere between 100 and $200,000 that they can put in as a max. But essentially, you know, when you uh you're moving money from one grandchild to another, uh you know, that there's no gift tax implications of that uh as long as they're in the in the same generation. Um and then new money going in if they go above the $38,000 per beneficiary, you know, as a couple, then they would just need to report it uh on a gift tax form so the IRS can use it against their lifetime exclusion.
Lorraine Yes, okay. Okay, very good. Well, thank you so much. I appreciate your insights and help.
Rob West Absolutely, thanks for your call today. By the way folks, um you know we love the 529 plan if you have earmarked the money for college related expenses. Now that can be K to 12 before college, it can be uh in college, uh it could also be a trade school. Uh you know, more and more students are thinking about trade schools and vocational training, not just traditional four-year colleges. So, you know they want to become an electrician or a plumber, HVAC certification or welding program, an automotive technician or cosmetology school or nursing certificate programs, apprenticeship programs. You know, those all generally qualify as programs and certifications that 529 plans can cover in addition to tuition and fees and books and supplies and equipment. Um and room and board uh as well as long as you're at least enrolled half time. So just keep in mind there's a wide range of uses there even if they're not necessarily committed to going to a traditional four-year school, and there's something really, you know, powerful about being able to put this money in after tax like a Roth IRA, have it grow tax-free hopefully for, you know, 10 or 20 years, and then being able to pull it out without any tax paid on that gain, again, so long as it's used for qualified educational expenses and, keep in mind, we can pass it to another beneficiary if one doesn't need it. We can take it out equal to scholarships and grants that are awarded on a pro rata basis, so that's helpful. And then now you have the ability to put over time up to the annual limits a total of $35,000 into a Roth IRA if they don't need it, which, you know, is huge because, you know, we talk all the time about just the power of that Roth IRA to be something that if that money's in there for decades, wow, the uh the compounding effect of that also tax-free to be able to be used for retirement is really significant. So, just a lot to consider there. By the way, if you want to pick the 529 plan that's best for you, keep in mind you don't have to use your state's 529 plan. Now, there may be a reason to do just that, and it often comes down to whether your state offers benefits, often a state income tax deduction for use of their 529, and even if their performance isn't the best, historically speaking, it still may prove to be best to stay in your state, but it may not be. They may have lousy performance or uh they may not offer any kind of benefit. So the way to evaluate that, I've found that the website savingforcollege.com, savingforcollege.com, is really the best way to get in there, run the scenarios, figure out how much you need to save, and then do the evaluation of the plan starting with your state and then looking at um you know the other states that have had better performance. Um, you know, and it does change from year to year. For instance, I was just reading the other day that the the best 529s from a performance standpoint and a ranking standpoint have been the last few years Utah, Alaska, Pennsylvania, Massachusetts, and Illinois. Just based on low fees, flexible investments, and strong uh performance, but again, savingforcollege.com can help you sort all of that out. All right, hope that helps.
Hey, we're out of time today. Let me uh just mention quickly, we're slightly behind on our uh support for uh this point in our fiscal year. Um and so we would uh love if you would consider if you enjoy the program, you found something helpful, would you consider making a gift today? You can do that on a one-time basis to help us reach more people with this message and support our work, or you can consider becoming a partner. All of that can be done at faithfi.com/give. You can help us get caught up today, maybe you can make a $250 gift or perhaps you're somebody who can do a $2,500 gift. All of it goes to help support this work to equip God's people to manage God's money, God's way. Again that website faithfi.com/give. Would you consider a one-time or gift or recurring partner gift? We would certainly be grateful.
Big thanks to my team today, Michael, Devin, Patty, Pat, everybody here at faithfi that makes this possible. Come back and join us tomorrow. We'll see you then. Bye-bye.
Rob West Generosity often begins with good intentions, but how do we turn those intentions into action? Hi, I'm Rob West. Many Christians genuinely want to give, but generosity doesn't always happen as intentionally as we'd like. Today, Kendra Vandermeulen joins us to explore how a thoughtful giving strategy can help us make the most of what God has entrusted to us. And then it's on to hear calls at 800-525-7000. This is Faith and Finance on American Family Radio, biblical wisdom for your financial decisions.
Rob West Kendra Vandermeulen is the CEO of the National Christian Foundation, or NCF, the nation's largest Christian donor-advised fund provider, and an underwriter of this program. For more than four decades, NCF has helped Christians put their generosity into action. Through its giving fund, thousands of believers have helped direct more than $25 billion to over 100,000 churches and charities. Kendra, what a treat to have you on the program.
Kendra Vandermeulen Thanks, Rob. It is so great to be here.
Rob West Well, we've been looking forward to it. Let's start, Kendra, with the gap between intention and action. Many Christians genuinely want to be generous, but following through isn't always easy. So maybe you could just share what you think keeps people from turning that desire into real action.
Kendra Vandermeulen Yeah, giving can be overwhelming. There are so many choices, so many different things to consider in terms of what to give, how to give, when to give, where to give. And without a strategy, competing needs and giving requests can become overwhelming.
Rob West Yeah.
Kendra Vandermeulen Our giving just becomes reactive at that moment, and we don't know how to say yes and no. And do that with grace, which is what we really want to be able to do. So having a giving strategy, a plan that has all the right facets to it, can help us step back and be more purposeful in where and how we give and when.
Rob West Yeah, I think that's well said. And I want to dig into the specifics on what that can actually look like. So if we want to move away from just being reactive givers to having more intentionality, what does it look like to develop a more intentional plan for our generosity?
Kendra Vandermeulen It all starts with a biblical foundation. Starts by exploring what scripture teaches about money and about stewarding God's resources and about giving in particular. Proverbs says in 3:9, "Honor the Lord with your wealth and with the first fruits of all that you produce." So we need to clarify what our calling is to give, the causes, the needs that bring us joy, that break our hearts, or compel us to get involved. We need to think about the resources that God's placed in our hands, how he might use those, and what expectations he has for us as managers of his resources. And we don't have to do the whole strategy all at one time. We don't need to be paralyzed by the desire for perfection, because perfection's never going to come in this matter, but we can take one faithful step at a time to get better and better at it.
Rob West Mm, yeah. I love that idea of thinking about what breaks our heart and the causes and needs that bring us joy to be a part of solving and participating in, as you said, that challenge our heart. I think that's a great place to begin, and this idea of having a strategy underneath all of that, I think is so essential. Now, NCF of course encourages people to think beyond cash, which is how we do most of our giving, but it's not where our real wealth exists. So before the break here, what are just some of those assets people might overlook that could open the door to even greater giving?
Kendra Vandermeulen Yeah, 90% of our giving comes from our checkbooks, but 90% of what God's entrusted to us is not in our checkbooks. And where is it? Well, it can be found in all kinds of assets that are on our balance sheet rather than cash. Those assets include stocks and bonds, but they also include parts of our family business or the real estate portfolios that we've developed over the course of our career. Real estate, private investments, retirement assets, other non-cash assets, these all have incredible strategies when used well to provide opportunities for generosity.
Rob West Yeah. Well, we're going to continue to unpack those after the break, and we'll talk about the importance of giving before selling and how there are real tax benefits there. We're also going to dig into the donor advised fund, which you might think about as a charitable checking account, what NCF calls a giving fund, and how that's become a really popular tool for charitable giving. We're joined today by Kendra Vandermeulen, CEO of NCF, and more on giving intentionally after this break. Stick around.
SEGMENT 2
Rob West We're talking about turning good intentions into generosity. I'm joined today by my friend Kendra Vandermeulen. Kendra is CEO of the National Christian Foundation, or NCF, the nation's largest Christian donor-advised fund provider. We share a founder at Kingdom Advisors and NCF in Ron Blue, among others, Larry Burkett and Terry Parker, and NCF is an incredible partner serving so many givers. And Kendra, it's just amazing to see the sheer volume of dollars flowing through NCF into incredible ministries and perhaps that's something that's misunderstood is that NCF is not there to decide where the money goes, it's really to just help facilitate the giving, right?
Kendra Vandermeulen Yes, it's such a privilege to help some givers be wise stewards of what God's entrusted to them. And the fruit that flows out of that is just such a blessing. And it is true that we are a conduit. We exist to help them facilitate the resources that they have towards the gifts that they want to make. We do not make any grants to any charities out of anybody's fund. We only make grants when they recommend one and we're able to make that grant at their request.
Rob West Yeah, you can learn more folks at faithfi.com/NCF. Their work in complex gifts, asset-based giving, and certainly donor-advised funds, what they call a giving fund, is second to none. Again, faithfi.com/NCF is the place to go. Now, Kendra, before the break we were talking about non-cash giving, and you made a staggering statement that I think a lot of people miss, that 90% of our giving is done in the form of cash, and yet only 10% of our wealth, on average, is held in the form of cash, which means our greatest opportunity for giving isn't in our savings and checking accounts, it's over there on our balance sheet. It's the assets that we have, the investments and the businesses and the real estate. I want to talk about why it's important to think about generosity before a major financial event like selling a business or real estate or other appreciated assets.
Kendra Vandermeulen Yes, timing can be really critical. If you're considering a sale, charitable planning before that transaction will help us help you decide what can ultimately go to charity and what has to go to taxes. Giving ahead of the sale can help you increase the amount that's available for charitable giving at the expense of your taxes, but that has to be done in a legal and thoughtful way in order to accomplish your goals. So, depending on your circumstances, you can have very favorable tax treatment, but every situation is different. And so we need to look at those things early and often. We need to involve your tax team, your financial advisors, and we need to do a fair amount of planning in order to make these things happen. And the sooner we start, the better.
Rob West Mm, yeah, I'd love for you to unpack that a bit more. You mentioned the importance of having advisors, you mentioned the importance of NCF being there to work alongside you. Anything else that someone needs to know about who they should involve early in the planning process before making a major sale?
Kendra Vandermeulen Well, it really depends on what it is they're going to be selling. Sure. So if they're selling the family business and this is the primary asset of an extended family, then your family needs to be involved in that conversation. It's usually part of a larger plan to both transition the business and make sure that it lands well for the sake of all the customers and the employees and all of the different stakeholders of the business, but also that the assets land well for the family and what the family's larger goals are. So often if you've already given a lot of thought to that and involved your family or extended family in those conversations, such that together you have a vision for where you would like to see the impact from the assets that God's entrusted to you, then together you can come up with a plan of how much to give, how much to save, and where to send it. And over what time horizon.
Rob West Yeah, that's well said. Kendra, of course, we're here in late October, the end of the year is coming, is there still time for some of these asset-based gifts to occur at this point?
Kendra Vandermeulen There is still time. So, it is possible depending on what kind of asset you have to make these decisions into December. But there are some assets, real estate in particular being one of them, where the later it gets, the harder it gets. And so we have a set of actual deadlines for when we need to know at least know about a particular gift depending on the type of gift, and those deadlines are available on our website.
Rob West Great. Again, faithfi.com/NCF is the place to go. All right, Kendra, I want to talk about the donor-advised fund. This is of course become a really popular tool for charitable giving. How can they help people become more intentional and even strategic with their generosity?
Kendra Vandermeulen Yeah, one of the real big benefits of a donor-advised fund is it allows you to make a gift, get the taxes all straightened out on that gift, so get your deduction and understand where it's going to land with regard to a tax outcome, and then take some time to decide where you want to give. So it separates the tax planning from the gift planning, if you want to call it that, the planning of the giving. And that is so helpful to people because in situations like this where we're dealing with what we call complex assets, we're called them complex for a reason. They're not easy. And so we want to make sure we can concentrate all of our efforts on the front end on all that great planning to make sure that the business lands well as I mentioned earlier, and all of the taxes are paid and all of the things that they wanted to accomplish on the front end are handled, and then they can get into the question of when and where and how to make the actual grants.
Rob West Again, folks, NCF calls the donor-advised fund a giving fund. You can open one in just a few minutes at faithfi.com/NCF. And I think it's one of the most powerful giving tools available, and Kendra mentioned a few of those benefits. Another benefit is just this idea that you can you know make the gift to many ministries out of the donor-advised fund once it's funded, and you only get one tax statement. You're not keeping up with all of those contribution receipts, which is just so helpful. Kendra, when it comes to the donor-advised fund, because often it's being funded maybe with the sale of an asset and funded at a significant level, oftentimes folks are not ready to deploy those resources right away, they can actually invest the money in a faith-aligned way right in the giving fund, right?
Kendra Vandermeulen That is correct. We tend to think of this as the grow part of the value proposition. So donor-advised funds talk about three steps or three values that a donor-advised fund can bring: give, which is what we've talked about in terms of the planning on the front end; grow, which is what you just mentioned, where I'm investing these assets in a faith-driven way in our case, in order to grow them over time; and then grant, which is where I'm deciding exactly which charities are going to receive how much and when. The investment options that we provide are run the gamut from cash investment options that provide interest rate returns to stock or bond or fixed income or equity types of investments all the way to alternative investments. So there's a lot you can do with your giving fund once you've funded it.
Rob West Incredible. Well, Kendra, we've covered a lot of ground here today. So thankful for our partnership with NCF and for your time today.
Kendra Vandermeulen You are so welcome. Thanks for having me.
Rob West That's Kendra Vandermeulen, CEO of the National Christian Foundation. If you want to learn more, a quick way to get to their website is just to go to faithfi.com/NCF. That's faithfi.com/NCF. We'll be right back.
SEGMENT 3
Rob West So thankful to have you with us today on Faith and Finance here on American Family Radio. What a treat to have Kendra Vandermeulen in the studio today, CEO of NCF. Don't miss this opportunity, folks, to set up your donor-advised fund. I think really everyone needs one. Think of it like a charitable checking account. It has some powerful tools for your giving. If you want to do bunching—meaning you get a bonus, and maybe you want to do a couple of years' worth of giving at once to get above the standard deduction and then grant it out over time with a few clicks of a button. Maybe you want to make a gift of appreciated stock or some other asset to avoid capital gains. You don't quite know where you want to give the money? Well, the donor-advised fund is the vehicle to do it. You give it to the donor-advised fund, which is yours, controlled or held by the donor-advised fund sponsor, but your account that you open, when you give that asset or a portion of it—you don't have to give the whole thing—it can then be sold in the donor-advised fund. That means no capital gains. The donor-advised fund is now funded with cash upon the sale. You get the contribution receipt for the full amount, and perhaps that's what allows you to get above that standard deduction, then you give it out as the Lord leads. You log into your donor-advised fund, your giving account at NCF, you pick your charity or your church or the other ministry you want, you click a button, and the check is gone. You can do it anonymously or in your name, that's your choice. It's quick and easy. Again, it's called a giving fund, and you can open one in five minutes today when you go to ncfgiving.com. That's ncfgiving.com.
Rob West All right, in just a few moments we're going to begin taking your questions today. So here's my question for you: What is that one thing you've been considering in your financial life? You've been thinking about it, wrestling with it, and you're just needing another source of counsel before you make the decision, something you're stuck on. Maybe that stuck thing is that debt that you just can't make any progress on. Maybe you're stuck with spending, trying to balance the budget. Maybe you're stuck with how much do I leave to my kids and what impact might that have. By the way, our brand-new field guide, How Do I Prepare the Next Steward? is out. Well, almost. It's here, it's in our warehouse. Our team is getting ready to launch it. It will be on the site any day now, and we're going to have a special launch with an opportunity to secure your field guide at 50% off one day only. We'll tell you when it's coming. But we're so excited about this new tool that will allow you to pass spiritual, character, relational, and financial wealth to the next generation. It's going to give you that biblical perspective. It's going to give you those exercises in each of those four areas to lean into, and then some case studies of others that have gone before you. And so we can't wait to put it in your hands. It's field guide number two, and it's out any day now. We'll let you know.
So, maybe that's your burning question today: How much do I leave to my heirs? Maybe you have a wayward child and we're praying for that child, you're fervently praying for the Lord to draw them unto himself, for the scales to drop, for them to see their need for a savior. But you're wondering, while you're praying through that, what do I do? If the Lord were to call me home, does $X in their hands tomorrow or a year from now, is that a good thing? Would it draw them closer to the Lord, would it accelerate their walking away from the Lord? How do I wrestle through that? Maybe that's your question today. Whatever's on your mind, here's the number with lines open: 800-525-7000. That's 800-525-7000. Our team is standing by. We're going to dive into those questions here in just a moment, so any financial question, now is the time to call: 800-525-7000.
Rob West In the news today, you might think earning half a million dollars a year would bring peace to your finances. But a Goldman Sachs survey found that nearly 37% of Americans earning more than $500,000 annually say they're living paycheck to paycheck. Even more surprising, 46% make only minimum payments or less on their credit cards, and 80% have delayed major financial goals. Now here's the reality: for many, as income increases, so do expenses. Bigger homes, nicer cars, more expensive lifestyles can leave even higher earners feeling financially stretched. I know, it's hard to believe if you're not in that, you're not in that spot, you might think, "If I had a half a million dollars, that would not be a problem." Nevertheless, the data says otherwise.
This reveals, of course, the deeper issue. There's always the issue beneath the issue, right? Money, Ron Blue often says, is like an iceberg. The 10% above the waterline is the money management, it's the things we do with the money that we can see tangibly, but the 90% of the mass of the iceberg below the waterline are the values, the why, what it's doing to our hearts, how money intersects with the human heart, which we know money issues are heart issues. And so what the deeper issue is, is that more money can't fix what hasn't been addressed in the heart. Ecclesiastes 5:10 reminds us that whoever loves money never has enough. If we're looking to money for the security, the satisfaction, the peace that only God can provide, no amount will ever feel like enough. And if we haven't learned contentment and stewardship with what we have today—he who has been faithful with a little will be faithful with much, you remember that?—well, then a bigger paycheck won't automatically change that. Here's the reality: true peace isn't found in having more money, it's found in trusting God knowing He is enough, so that money doesn't have to be.
Wow, that's a big idea. One that's easy to articulate, a lot harder to live by, and yet it is true. Jesus is our ultimate treasure, money a powerful and good tool, so long as we don't place it on the throne of our lives.
Now, we don't tangibly do that, right? We would say, "No, of course I wouldn't do that." But in practice and in our thought life, is money the ruler of our lives? Well, that's very easy for that to be the case, especially in the most prosperous nation in the history of the world, and yet we need to be on our guard there. So, hopefully each day on this program we can encourage you and remind you of these truths—I'm talking to myself at the same time—so that we can be found faithful with what passes through our hands. It's not a matter of how much or how little you have, it's what does faithfulness look like today with what I have right now.
All right, after this break we're going to dive into your questions. Call right now, a few lines still remain open: 800-525-7000. We'll be right back, stick around.
SEGMENT 4
Rob West Great to have you with us today on Faith and Finance here on American Family Radio. I'm Rob West. We've got a few lines open. We're taking your questions today on anything financial. Call right now. 800-525-7000. That's 800-525-7000. We'd love to hear from you. We're going to begin today in New York. Maria, we're so grateful for your call. How can I help you?
Maria I am also so very grateful for your program. And the first question I have to—there are two. One is how do you calculate the QCD for your—I'm 71, so I need to take care of that. And number two is how do you vet the organization that you are donating to because sometimes they're corrupt?
Rob West Yes. Yeah.
Maria Those are the two questions and thank you so much.
>> That's very kind, and I'm delighted you called today. Let's start with the first question. You said QCD. Do you actually mean required minimum distribution that you're going to handle through a QCD when you said how do you calculate it? What number are you trying to calculate?
Maria What I'm trying to calculate is, remember, I remember you've spoken, and I think I've spoken with you about it, the connection between the prof—the total, the—the modified the the Maggie, and then the Irma, and then your—your QCDs the only way to balance that off.
Rob West Ah, got it. Yes. Okay. Uh, very good. So, you're not—yeah, you mentioned your uh 72, right? So, you don't have a required minimum quite yet, correct?
Maria Yes, but I'm trying to, you know, already bring my whatever it is down. My, yeah. That's what I'm doing. And I want to do it while I am aware of who I'm giving it to.
Rob West Yes. Yeah, makes sense. I love this idea, Maria, and and what kudos to you for thinking through this at this level. Um, so, yes, a qualified charitable distribution is an excellent way to manage the Medicare IRMAA surcharges by reducing the income Medicare uses to calculate premiums. And, you know, the QCD is a great way to do that. So, the key is to understand the connection between your—what you said, MAGI, the modified adjusted gross income, the IRMA, which is the income-related monthly adjustment amount, and the QCD, we're at alphabet soup here, qualified charitable distribution, and how they work together.
So, uh the modified adjusted gross income for Medicare IRMA purposes, generally, your adjusted gross income, your AGI, is the factor that determines whether or not you will have a surcharge on your Medicare two years later. IRMA is that amount, the additional Medicare Part B and D premium charged when your modified adjusted gross income exceeds certain thresholds, and then the qualified charitable distribution is from an IRA, and that allows it to be excluded from your taxable income.
Now, a QCD, um, you know, can lower AGI, the adjusted gross income, which then lowers the Medicare uh modified adjusted gross income to keep you below the IRMA threshold. So, really, it's going to come down to um what those thresholds are. Are you a single filer?
Maria Yeah, I think for me it's 109.
Rob West Yes, that's right, 109 or less would be once you get over 109, then you're going to add 200 this year at least for 2026 premiums, you're going to add $202.90. So, you need to keep that modified adjusted gross income below 109,000. Um, so that would allow you to, you know, direct some money to charity um from uh dollars you were, you know, normally taking out of your IRA to satisfy your RMD, and instead of doing that, send it straight to the charity, thereby not adding to your taxable income for the year, but also allowing you to satisfy the required minimum such that um, you know, you wouldn't trigger that uh that premium.
Maria Yeah. So excellent explanation. I could follow it now.
Rob West Excellent. Well, I'm I'm glad to hear it. And uh we're we're so thrilled that you're thinking this way, and this is going to allow you to give more uh money to uh to God's purposes through your your giving. So that's great. The second question you asked was related to ultimately uh how do you determine if the organization you're giving to, you know, is worthy of that. And I love the idea that you're thinking about some due diligence before you make a substantial donation. Um, there's several ways to evaluate whether a ministry is trustworthy. Um, one would be an organization called Charity Navigator. Charity Navigator, they have a website, and they review the financial health, they do provide some accountability, uh they evaluate leadership and impact. And so Charity Navigator would be a good one.
The second one that I would mention is ECFA, what people call Ekfa for short. It stands for the Evangelical Council for Financial Accountability. For instance, Kingdom Advisors and Faithfi and American Family Association, we have the ECFA certification, which just simply means we have to meet high standards. We need to have an independent audit every year. We need to, you know, comply with their rules and regulations to get the ECFA seal of approval for financial accountability. Well, ECFA certified would be a great thing for you to require for any ministry you're giving to. Apart from your local church, which typically they won't use the ECFA certification. So, I would say those two things would be a good starting point, Charity Navigator and ECFA.
Now, Jesus taught that we can recognize people by their fruit in Matthew 7. So, I think we would want to ask, does this organization demonstrate biblical integrity? Is the leadership transparent? Does its work genuinely reflect Christ's love and compassion and truth? Is there evidence that the donations are making a meaningful difference? And I realize those questions are more subjective versus the objective measure of the Charity Navigator and the ECFA certification. But I think it is important for you, you know, to look at that.
One other consideration, depending, Maria, on how large the gift is, I think you want to know does the organization have the capacity to manage my gift, and what percentage of the annual budget would it be? Now, that may not be a factor, but in some cases where it's a small church or a small organization or we're making a major gift, we could end up giving something that would be substantial in terms of the total percentage of the budget, and we just want to know that they're prepared for that in terms of they know what to do with it, they're going to manage it wisely, they don't become dependent on it, those kinds of things. But I think from a really practical standpoint, I would probably start with Charity Navigator and the ECFA certification. Is that helpful?
Maria Oh, that's yes, very much so, very helpful because I think what's happening is sometimes you overthink it to the point where you don't do anything for fear that it will go get wasted.
Rob West Yeah, I think that's right.
Maria So, yeah.
Rob West Absolutely. And you know, I think the key idea here is that, you know, we want to handle charitable gifts honorably, and you know, just as we're stewards of what passes through our hands that we spend, we also should be good—also should be good stewards of what we give. Now, at the end of the day, if you've done your part to check these uh you know uh Charity Navigator rating, you look at ECFA, you talk to the ministry, you're evaluating the fruit, at the end of the day, you make the gift and you leave it up to the Lord as to how it's going to be used. But I think there is a role in good stewardship to do your part before you make the gift, and that's precisely what you're getting at.
Lord bless you, Maria. Thanks for calling today. Lorraine, come in your way after the break. Stick around.
SEGMENT 5
Rob West Delighted to have you with us today on Faith and Finance here on American Family Radio. We do have a few lines open, if you've got a question today, call right now 800-525-7000. That's 800-525-7000. We'd be delighted to tackle that burning question you've got in your financial life today, help you think about it in light of biblical wisdom. Let's go out to Texas. Lorraine, how can we help?
Lorraine Hi there, first of all, say thanks so much for your program. It's just I love how you clearly explain things and make it simple to understand, so I appreciate that.
Rob West Well, thank you.
Lorraine My question is about 529 accounts. Basically, the question is, is it possible to transfer the ownership of an account to someone who is not the original beneficiaries? And let me just give you some background. My parents had set up some accounts for their grandkids, and now they want to kind of get out of being in the middle of that or just having those accounts, and they want we, the parents of the grandkids, to own the accounts and then to do with it what we want. Now, we may or may not be actually using them for educational expenses because the kids have grown and, you know, they're we could give them to their grandkids, but my parents want to leave that all up to us. So, um it's kind of complicated, I hope that makes sense. Let me see what you have. Okay, great.
Rob West It does. Yeah. Yeah, and you you've pointed out a really important distinction there because we need to distinguish between the account owner and the beneficiary. So the account owner, which is your what you're referring to, is the person who controls the account, makes the investment decisions and determines the withdrawals. The beneficiary is the person who's qualified educational expenses the money is intended to pay. And so, you know, based on your question here, yes, if the grandparents established the 529 for their grandchildren, they can often transfer ownership of those accounts to the grandchildren's parents without changing the beneficiaries. It's fairly common. And so essentially what would happen is, you know, the the transfer would take place, the beneficiaries could remain unchanged, the money stays in the existing 529s, and then the parents, you and perhaps your siblings, would then now control the investment decisions, the withdrawals, the future account management. In terms of any tax consequences, generally a straightforward change of account ownership, you know, doesn't trigger any kind of tax whatsoever. It it could have gift tax implications where you would just need to report it to the IRS, but it wouldn't be taxable. You know, some states have restrictions or special consequences when account ownership changes, so you may just want to check on that. But essentially what would happen is the grandparent would contact the 529 plan administrator and just ask, can we transfer account ownership from us to the parents of the beneficiaries while keeping the grandchildren as designated beneficiaries? They would provide the appropriate change of owner paperwork and explain, you know, whether the the plan permits the transfer because each plan has their own rules and regulations, although again it it shouldn't be a problem. And then if the grandparents primarily just want to ensure the parents can take it over if something happens, then they could name them as successor account owners, but in your case it sounds like they want them to have full ownership and and that can absolutely be done. Does that make sense?
Lorraine It does, and I just realized as you were explaining that, I failed to include an important fact. Okay, so originally, you know there's we've got seven grandkids, but only four accounts, and those accounts, um, are for different grandkids. So, um I've got so in my case, my parents set one up for my son, it's still got money in it, but that what my parents want to do is divide that account up into four four equal amounts for my for all the siblings, for my siblings.
Rob West Yes. Okay.
Lorraine Does that make sense?
Rob West Yes. So, um they what they want to be able to break it up at the same time that they change the ownership?
Lorraine Right. Right.
Rob West Yeah.
Lorraine And of course the cost basis is different and the cost of earnings are different, so tax implications if they get if it gets withdrawn without being used for educational purpose would be different for all of them.
Rob West Yeah. No, that's right. I mean, hopefully it would be used for qualified educational expenses, um, you know, or taken out based on scholarships or grants on a pro rata basis, and that wouldn't be, you know, needed.
But yes, essentially, they can divide the money in the four existing 529s among all seven grandchildren. They don't need to cash out the accounts or pay taxes. So the important distinction is that transferring ownership and dividing the money among the beneficiaries are two different transactions. So, um you would probably want to open additional 529s, and they could do it or you could do it for the three grandchildren that don't currently have one, and then they would transfer portions of the existing account. So most 529s allow partial transfers to another 529 account for an eligible family member of the original beneficiary, and then keep the money invested because that's a properly structured 529 to 529 transfer, so that avoids any kind of withdrawal whatsoever. And then um, you know, once the funds are divided, then the grandparents could request that the parents, you know, be uh replaced or that they would be replaced by the parents as now owners of the four accounts.
Lorraine Is there any limit to the amount that can be transferred and I'm thinking of the gift I think it's about $19,000 that a family member can make. Is there is there restriction in place for the for the transfer of funds from a 529?
Rob West Uh, yeah, so I mean there's no fixed federal dollar limit on transferring money between 529 accounts. In terms of the gift tax limits, for this year it's 19,000, so a married couple two grandparents could transfer 38,000 to any one individual. Um, you know, the you know, the five-year 529 contribution election, uh, you know, has them it's somewhere between 100 and $200,000 that they can put in as a max. But essentially, you know, when you uh you're moving money from one grandchild to another, uh you know, that there's no gift tax implications of that uh as long as they're in the in the same generation. Um and then new money going in if they go above the $38,000 per beneficiary, you know, as a couple, then they would just need to report it uh on a gift tax form so the IRS can use it against their lifetime exclusion.
Lorraine Yes, okay. Okay, very good. Well, thank you so much. I appreciate your insights and help.
Rob West Absolutely, thanks for your call today. By the way folks, um you know we love the 529 plan if you have earmarked the money for college related expenses. Now that can be K to 12 before college, it can be uh in college, uh it could also be a trade school. Uh you know, more and more students are thinking about trade schools and vocational training, not just traditional four-year colleges. So, you know they want to become an electrician or a plumber, HVAC certification or welding program, an automotive technician or cosmetology school or nursing certificate programs, apprenticeship programs. You know, those all generally qualify as programs and certifications that 529 plans can cover in addition to tuition and fees and books and supplies and equipment. Um and room and board uh as well as long as you're at least enrolled half time. So just keep in mind there's a wide range of uses there even if they're not necessarily committed to going to a traditional four-year school, and there's something really, you know, powerful about being able to put this money in after tax like a Roth IRA, have it grow tax-free hopefully for, you know, 10 or 20 years, and then being able to pull it out without any tax paid on that gain, again, so long as it's used for qualified educational expenses and, keep in mind, we can pass it to another beneficiary if one doesn't need it. We can take it out equal to scholarships and grants that are awarded on a pro rata basis, so that's helpful. And then now you have the ability to put over time up to the annual limits a total of $35,000 into a Roth IRA if they don't need it, which, you know, is huge because, you know, we talk all the time about just the power of that Roth IRA to be something that if that money's in there for decades, wow, the uh the compounding effect of that also tax-free to be able to be used for retirement is really significant. So, just a lot to consider there. By the way, if you want to pick the 529 plan that's best for you, keep in mind you don't have to use your state's 529 plan. Now, there may be a reason to do just that, and it often comes down to whether your state offers benefits, often a state income tax deduction for use of their 529, and even if their performance isn't the best, historically speaking, it still may prove to be best to stay in your state, but it may not be. They may have lousy performance or uh they may not offer any kind of benefit. So the way to evaluate that, I've found that the website savingforcollege.com, savingforcollege.com, is really the best way to get in there, run the scenarios, figure out how much you need to save, and then do the evaluation of the plan starting with your state and then looking at um you know the other states that have had better performance. Um, you know, and it does change from year to year. For instance, I was just reading the other day that the the best 529s from a performance standpoint and a ranking standpoint have been the last few years Utah, Alaska, Pennsylvania, Massachusetts, and Illinois. Just based on low fees, flexible investments, and strong uh performance, but again, savingforcollege.com can help you sort all of that out. All right, hope that helps.
Hey, we're out of time today. Let me uh just mention quickly, we're slightly behind on our uh support for uh this point in our fiscal year. Um and so we would uh love if you would consider if you enjoy the program, you found something helpful, would you consider making a gift today? You can do that on a one-time basis to help us reach more people with this message and support our work, or you can consider becoming a partner. All of that can be done at faithfi.com/give. You can help us get caught up today, maybe you can make a $250 gift or perhaps you're somebody who can do a $2,500 gift. All of it goes to help support this work to equip God's people to manage God's money, God's way. Again that website faithfi.com/give. Would you consider a one-time or gift or recurring partner gift? We would certainly be grateful.
Big thanks to my team today, Michael, Devin, Patty, Pat, everybody here at faithfi that makes this possible. Come back and join us tomorrow. We'll see you then. Bye-bye.
Generosity often begins with good intentions, but how do we turn those plans into action? Many Christians genuinely want to give, but generosity doesn't always happen as purposefully as we'd like. On this Faith & Finance on AFR, Rob West and Kendra VanderMeulen explore how a thoughtful giving strategy can help us make the most of what God has entrusted to us. Then, it’s on to calls.
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