[Topic is now in Personal Finance (Not Investing) - mod mkc]
I am planning to gift my two adult children $200,000 each. This amount exceeds my annual RMD, and I would have to sell investments in my retirement account to gift them. We are in the 24% tax bracket. These large withdrawals would push us into a higher tax bracket so we would pay that higher tax rate on the withdrawals as well as on our own RMD.
I could also sell highly appreciated shares in our brokerage account, but this has several disadvantages--primarily that in addition to the 20% capital gains tax on the appreciated portion and pushing us into a higher tax bracket, that we would lose the opportunity to bequeath the brokerage-held assets to our heirs on a stepped-up basis when we shuffle off this mortal coil.
To avoid the tax consequences of a large withdrawal from either retirement or brokerage funds, I am thinking of taking an equities-secured line of credit from Fidelity and then gifting my sons money from this line of credit and paying the interest rate on that loan instead of the tax on a withdrawal. There are no tax or estate tax consequences for doing this, I believe.
Is this a wise thing to do?
I am planning to gift my two adult children $200,000 each. This amount exceeds my annual RMD, and I would have to sell investments in my retirement account to gift them. We are in the 24% tax bracket. These large withdrawals would push us into a higher tax bracket so we would pay that higher tax rate on the withdrawals as well as on our own RMD.
I could also sell highly appreciated shares in our brokerage account, but this has several disadvantages--primarily that in addition to the 20% capital gains tax on the appreciated portion and pushing us into a higher tax bracket, that we would lose the opportunity to bequeath the brokerage-held assets to our heirs on a stepped-up basis when we shuffle off this mortal coil.
To avoid the tax consequences of a large withdrawal from either retirement or brokerage funds, I am thinking of taking an equities-secured line of credit from Fidelity and then gifting my sons money from this line of credit and paying the interest rate on that loan instead of the tax on a withdrawal. There are no tax or estate tax consequences for doing this, I believe.
Is this a wise thing to do?
Statistics: Posted by duffer — Fri Nov 08, 2024 8:53 pm — Replies 4 — Views 257