Pooled Income Fund

AAA

DEFINITION of 'Pooled Income Fund'

A type of mutual fund comprised of gifts that are pooled and invested together. Income from the fund is distributed to both the fund's participants and named beneficiaries according to their share of the fund. If you are a donor to the fund, you and the other income recipients you choose receive quarterly payments for life, and upon your death the value of the assets will be transferred to the beneficiaries.

INVESTOPEDIA EXPLAINS 'Pooled Income Fund'

Basically, a pooled income fund allows you to do three things: 1) ensure a perpetual income, 2) claim a current tax deduction and 3) make a future gift to charity.

For example, say you own stock with a value of $50,000. Then you donate the stock to the pooled income fund to eventually fund scholarships for underprivileged students and reserve for yourself an income interest for life. In the transfer of stock to the fund, you do not recognize a capital gain on the appreciated value since original purchase, so you avoid capital gains tax. You will also receive a charitable deduction for the year you enter into the pool, lowering your taxes.

RELATED TERMS
  1. Sin Stock

    A stock of a company that is either involved in or associated ...
  2. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  3. Commingled Fund

    A fund consisting of assets from several accounts that are blended ...
  4. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
Related Articles
  1. Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

    Learn about the basics - and the pitfalls - of investing in mutual funds.
  2. Mutual Funds & ETFs

    How To Apply Technical Indicators To Mutual Funds

    Mutual funds do not readily lend themselves to technical analysis, but investors can use common indicators to evaluate mutual funds as easily as stocks.
  3. Professionals

    Should Investors Nix Actively Managed Funds?

    Index fund returns are on a tear but does this mean investors should nix actively managed funds?
  4. Mutual Funds & ETFs

    Are These 2015's Most Promising Mutual Funds?

    For 2015, the mutual funds covered below are likely to offer more upside potential than the vast majority of mutual funds in existence.
  5. Mutual Funds & ETFs

    Why These Could Be 2015's 10 Best Mutual Funds

    These 10 mutual funds offer strong potential for 2015. Here's why.
  6. Professionals

    State Street Slashes ETF Fees

    State Street has slashed fees on 41 of its ETFs in the wake of historic redemptions.
  7. Stock Analysis

    Will Spinoffs Give American Capital A Pop?

    American Capital shareholders have long awaited a plan to spin off the company's investments from its prized asset-management business.
  8. Mutual Funds & ETFs

    Pimco and Vanguard: A Tale of Two Fund Managers

    A look at the similarities and differences of asset management giants Pimco and Vanguard.
  9. Fundamental Analysis

    An Overview of Janus Capital Management

    A look at Janus Capital and the funds it manages.
  10. Mutual Funds & ETFs

    Five Janus Mutual Funds With High Alpha

    A look at some of the alpha-generating equity funds from Janus.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center