Nokia Employees: Year-End Idea #5: Charitable Giving

As Nokia employees prepare to give at the end of the year, they should 'plan ahead to maximize the impact of your donations,' says Michael Corgiat of The Retirement Group at Wealth Enhancement Group. Knowing how to maximize tax benefits and timing your giving can help you maximize your giving to charities.

The Retirement Group, a division of Wealth Enhancement Group, recommends that Nokia employees and retirees incorporate charitable giving into overall financial planning to help them meet their long-term financial goals. This approach supports worthy causes while optimizing possible tax advantages of such generosity.

In this article, we will discuss:

1. We pause to give thanks for our bounties and the people in our lives as the holiday season and the end of the year approach.
2.This also is a time when charities are often thought of. These tax benefits may make you want to donate more.
3. We recommend all able-bodied Nokia employees and retirees do this in their year-end tax planning.

A new study from Fidelity Charitable found that 60% of people over age 65 said they will give to charity in retirement, on average giving away USD 6,500 a year. That would suggest that charitable giving may be an important consideration for people approaching retirement age and could be a meaningful way to give back to causes they care about.

No tax deduction for charitable gifts.

Donations generally are deductible if you itemize deductions on your federal income tax return. This may help you increase your donation as well.

Example(s): Assume you want to make USD 1,000 in charitable donations. A possible way to potentially increase the value of the gift is to add the amount of any income taxes saved through the charitable deduction. You might give USD 1,316 to charity at a 24% tax rate [USD 1,000 (1 - 24%) = USD 1,316]. [USD 1,316 x 24% = USD 316 in tax savings]. Alternatively, you could donate USD 1,471 at a 32% tax rate to charity [USD 1,000 (1 - 32%) = USD 1,471; USD 1,471 x 32% = USD 471 in taxes saved].

Yet Nokia employees and retirees should be aware that their deduction may be limited to a certain percentage of AGI. You can, for example, deduct 60% of your AGI for the year on cash gifts to public charities versus 30% or 20% for other gifts to charity. Generally speaking, charitable deductions in excess of the AGI limitations can be carried forward and deducted over the following five years subject to income percentage limitations for those years.

For 2022 charitable donations, the normal rules apply: Direct cash donations to public charities may not exceed 60% AGI. You can take a USD 400 charitable deduction for direct cash donations to public charities from 2021 even if you do not itemize deductions.

Document your charitable donation properly. Any contribution of cash, a check, or other monetary gifts that you make must be recorded as either a bank record (such as a canceled check, a bank or credit union statement, or a credit card statement) or a written communication (such as a receipt or letter) from the charity giving its name, date, and amount. Any deduction you claim for a USD 250 or more charitable contribution must be accompanied by a contemporaneous written acknowledgment from the charity. You face additional requirements if you make non-cash contributions.

Year-end tax planning Employees and retirees of Nokia should plan for such charitable contributions when making year-end tax contributions. The timetable of your income and expenses usually has some bearing on you. Generally speaking, you should time recognition of your income so it is taxed at the lowest rate and recognition of your deductible expenses so they can be claimed in years when you are in the higher tax bracket.

If you expect to be in a higher tax bracket the following year, for example, delay making the charitable contribution until January so you can claim the deduction the following year when you will be able to take the larger tax benefit. Or you could roll the charitable contribution and other deductions over to a year where your itemized deductions are greater than the standard deduction. And if those income percentage limits apply to you in a given year, you may wish to move income into that year or move deductions out of that year to allow a larger charitable deduction for that year. A tax expert can evaluate your individual tax situation.

A word of caution For employees and retirees of Nokia, stick with reputable charities and avoid ones with similar names. Fraudsters often imitate charities on phony websites, emails, phone calls, social media, and in person solicitations. Search for the charity through the Tax-Exempt Organization Search tool at irs.gov. Don't send cash; instead, use a check or credit card.

It's like planting a tree with charitable giving. As a tree grows over time, so can your charitable donations. Benefits from charitable giving can be seen immediately in the recipient organization as well as in the long-term benefits of continued support. As a tree provides shade, clean air, and space for wildlife, charitable giving may help those in need as well as the community in general. Like a tree, your charitable contributions can also flourish long after you make them - and provide a legacy for future generations.

Added Fact:

The research shows that charitable giving benefits both the recipients and the donors as well—especially in their 60s. A study in Psychology and Aging in November 2022 reported lower stress, higher life satisfaction, and better health among older adults who regularly gave. Giving back and making a difference in others' lives can provide meaning and fulfillment in retirement.

Added Analogy:

Charitable giving is like planting bulbs in the fall in a garden. Nokia workers are like gardeners who have harvested plenty during their careers. Like these experienced gardeners who choose and plant bulbs which will bloom in the spring, retirees can choose charities and organizations to support. With every charitable donation comes hope in initiatives and programs that will change things for the better. Just as the gardener's work produces flowers, retirees' charitable gifts make an impact on others and last a lifetime. Remember that like a well-tended garden, charitable giving takes planning, tending, and joy in seeing the results grow.

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Sources:

'Tax Wise Charitable Gifting Tips and Secure Act 2023 Updates.' Jewish Foundation , 2023, www.pajewishendowment.org .
'Tax-time Charitable Giving Questions.' Rose Community Foundation , 2023, www.rcfdenver.org .
Accounting Insights Team. 'Maximizing Tax Benefits Through Strategic Charitable Giving.' Accounting Insights , 11 Jan. 2025, www.accountinginsights.org .
'7 Tax-Smart Charitable Giving Tips Before 2023 Ends.' San Diego Foundation , www.sdfoundation.org .
'Tax-time Charitable Giving Questions.' Rose Community Foundation , 2023, www.rcfdenver.org .

What unique features and benefits does the Nokia Retirement Income Plan offer to its participants, and how can these benefits be maximized by current employees of Nokia of America Corporation? Additionally, what resources are available for employees to educate themselves about the various aspects of the plan, including eligibility, distribution options, and potential tax implications?

The Nokia Retirement Income Plan offers participants a defined benefit plan designed to provide financial security through retirement by supplementing Social Security and other retirement savings. Benefits can be maximized through strategies like ensuring accurate service records, understanding distribution options such as lump-sum payments or annuities, and consulting financial advisors to align these benefits with long-term retirement goals(Nokia of America Corpor…).

How does participation in the Nokia Retirement Income Plan facilitate financial security in retirement for employees, specifically in terms of pension benefit calculations and options such as lump-sum distributions or annuities? Moreover, what are some strategies that Nokia of America Corporation employees can employ to ensure they are fully prepared to utilize their retirement benefits as they transition towards retirement?

Participation in the Nokia Retirement Income Plan ensures financial security in retirement through pension benefit calculations based on service years and salary history. Employees can choose from options like lump-sum distributions or lifetime annuities. By carefully selecting a distribution option and incorporating it into a broader retirement strategy, employees can optimize financial outcomes(Nokia of America Corpor…).

With respect to changes in personal circumstances, such as marriage or divorce, what provisions does the Nokia Retirement Income Plan have to protect the benefits of employees from Nokia of America Corporation? How can employees navigate the complexities of Qualified Domestic Relations Orders (QDROs) within the context of their pension benefits, and what resources are available to assist them in this process?

The Nokia Retirement Income Plan protects benefits in cases of personal changes such as marriage or divorce through provisions like the Qualified Domestic Relations Order (QDRO). Employees can consult the Nokia Benefits Resource Center for assistance in navigating QDROs to ensure a fair division of benefits. Guidance is available for understanding the QDRO requirements and how they apply to their pension(Nokia of America Corpor…).

What steps must employees take to initiate the commencement of their benefits from the Nokia Retirement Income Plan once they reach retirement age? Furthermore, what are the important considerations employees need to keep in mind regarding the selection of a payment form and any potential impact this may have on their overall financial strategy during retirement?

To initiate pension benefits under the Nokia Retirement Income Plan, employees must submit a claim when they reach retirement age. They should consider factors such as payment form options (lump sum or annuity) and the impact on long-term financial plans. Choosing the appropriate payment form is critical to maximizing retirement income(Nokia of America Corpor…).

How can employees of Nokia of America Corporation ensure their beneficiaries are properly designated under the Nokia Retirement Income Plan, and what implications does this designation have for benefit distribution in the event of their death? Additionally, what steps should employees take to update their beneficiary designations in light of significant life events?

Employees can ensure their beneficiaries are properly designated by updating their beneficiary forms through the Nokia Benefits Resource Center. Proper designation affects how benefits are distributed in the event of their death, and it is crucial to update designations after life events like marriage, divorce, or the birth of a child(Nokia of America Corpor…).

In terms of compliance with federal regulations, how does the Nokia Retirement Income Plan adhere to ERISA guidelines concerning employee benefits, and what rights do employees of Nokia of America Corporation possess under these regulations? Also, how can employees exercise their rights effectively if they encounter issues regarding their pension benefits?

The Nokia Retirement Income Plan complies with the Employee Retirement Income Security Act (ERISA), giving employees the right to receive information about their benefits and hold fiduciaries accountable. If employees face issues with their pension, they can exercise their rights through claims and appeals, with recourse available through legal action if necessary(Nokia of America Corpor…).

How does the Nokia of America Corporation support employees who might be eligible for a disability pension under the Nokia Retirement Income Plan, and what specific eligibility criteria must be met? Additionally, what resources are available to assist employees in understanding this facet of their retirement benefits?

Employees eligible for a disability pension under the Nokia Retirement Income Plan must meet specific criteria, such as proving permanent disability before reaching retirement age. Resources like the Nokia Benefits Resource Center can provide guidance on the eligibility process and required documentation(Nokia of America Corpor…).

What specific actions should an employee of Nokia of America Corporation take when applying for a pension benefit under the Nokia Retirement Income Plan, and what documentation is typically required to streamline this process? Furthermore, in the event of a claim denial, what recourse do employees have to challenge the decision through the plan's appeal process?

When applying for pension benefits, employees should provide documentation such as proof of age and employment history. In case of a denial, they have the right to appeal through the Employee Benefits Committee. If necessary, employees can further appeal to federal courts under ERISA(Nokia of America Corpor…).

How does the pension benefit guarantee from the Pension Benefit Guaranty Corporation (PBGC) apply to employees of Nokia of America Corporation, and what are the limitations of this guarantee in protecting retirement benefits? Additionally, how can understanding these protections help employees make informed decisions regarding their retirement planning?

The Pension Benefit Guaranty Corporation (PBGC) guarantees benefits under the Nokia Retirement Income Plan in case the plan terminates. However, there are limitations, such as caps on benefit amounts. Understanding these protections helps employees make informed decisions about their retirement planning(Nokia of America Corpor…).

How can employees contact the Nokia Benefits Resource Center to gain more information about their benefits and the specific resources available under the Nokia Retirement Income Plan? What are the recommended communication channels and hours for reaching out to ensure timely and effective assistance?

Employees can contact the Nokia Benefits Resource Center through the Your Benefits Resources (YBR) website or by calling the designated phone line. It is recommended to use these channels during business hours (9:00 a.m. to 5:00 p.m. ET) for timely assistance with pension-related questions(Nokia of America Corpor…).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Nokia provides both a defined benefit pension plan and a 401(k) savings plan. The defined benefit plan includes legacy plans from Alcatel-Lucent and Siemens, providing retirement income based on years of service and final average pay. In 2021, Nokia merged its Retirement Plan (NRP) with the Lucent Technologies Inc. Pension Plan (LTPP) to streamline management. The 401(k) plan offers diverse investment options and company matching contributions.

Operational Efficiency: Nokia is undergoing a restructuring process that includes layoffs affecting about 5,000 employees globally. Strategic Focus: The company is shifting its focus towards 5G technology and network infrastructure (Source: Reuters). Financial Performance: Nokia reported a 7% increase in net sales for Q2 2023, reflecting strong demand for its 5G products (Source: Nokia).

Nokia provides both RSUs and stock options to its employees. RSUs vest over time, converting into shares, while stock options allow employees to buy shares at a set price.