Time running out for IRA Charitable Rollover says Seattle-area philanthropy advisor

Image Credit: jewishpalmbeach.org
Image Credit: jewishpalmbeach.org

Seattle-area Philanthropy Advisor, Richard Bray, of www.StrategicGivingAdvisor.com, says certain seniors are running out of time to make tax-free charity IRA charitable gifts before December 31 deadline.  He urges individuals to consider it and recommends charities promote the opportunity to supporters….

If you are 70 1/2 years of age or older you have until December 31 to take advantage of a special tax-free opportunity this year to benefit the causes you care about. Known as the IRA Charitable Rollover, it is a great way to give effectively. Seniors should consider it, and charities ought to promote it.

“With an IRA Charitable Rollover, eligible seniors can make a charitable gift now, save taxes and see firsthand the gift at work," says Richard Bray. “You don’t have to wait until your passing to help charity. If you desire, you can enjoy helping the causes you are passionate about now.”

The IRS allows you to make a gift from your IRA account tax-free and direct it to the charity or charities of your choice. This gift can be any amount up to a maximum of $100,000 (double for married spouses). Your gift also counts towards the required minimum distribution that you must take out this year. But be careful. An IRA charitable rollover distribution must be sent from your IRA account directly to the charity by your IRA custodian. Otherwise, if the funds come to you first, you will have to pay taxes on them. You probably don’t want this!

The IRA Charitable Rollover was originally passed by Congress in 2006 for two years. Since then it has been reauthorized for two years at a time. It has not been renewed for 2014 & 2015—so now is a great time to consider doing it, while it is still available. Something else to be aware: you can not do a IRA Charitable Rollover from a Roth IRA, 401(k), 403(b) or other retirement accounts.

Before the IRA Charitable Rollover, there wasn’t an incentive for people 70 ½ and older to make early gifts from their traditional IRA accounts.  And why would you consider gifting in this way? Taking a non-IRA charitable distribution out of a traditional IRA account this year would be taxed—up to 39.6% for some.  But by making an IRA charitable Rollover you pay no income tax on these funds. Bray hopes Congress will extend the IRA Charitable Rollover for another two years, but “the future is uncertain right now," he says.

Many individuals reflect with their loved ones on the values they wish to perpetuate as part of their estate planning. Providing for loved ones is a key goal. In addition, people also consider their legacy and how to foster their values through estate gifts to their favorite charities. Sometimes it results in a special gift from an IRA before one's passing or as a beneficiary designation.

Bray tells people if it is financially feasible, and you would like to see first-hand the fruits of your IRA gift, then by all means consider it. An IRA charitable rollover gift can go to any qualified charity: your church, your university, a group helping the needy, health care or issue group, an environmental or cultural group. Support one or more charities! However, private foundations, donor advised funds or supporting organizations are ineligible to receive IRA Charitable Rollover gifts.

In addition, he recommends discussing a possible IRA Charitable Rollover gift with your professional advisor to make sure it’s right for your financial situation. If so, it may result in a special gift for your favorite charity.

And what kind of result do you want from your giving? For example, funds could provide food for the hungry or give housing assistance to prevent homelessness. Scholarships for education could be increased for needy students. Our environment could be improved. Spirituality and faith could be supported to nurture our souls. The arts could flourish.

So, if it makes sense, don't wait for your passing to impact your community with your funds from your IRA account. Though the holiday season is a busy one, both individuals and charities should take the time to consider the IRA charitable rollover, and the opportunity to share it with other friends who may not know the option even exists.

“Arranging an IRA charitable rollover this year, before December 31, enables you to make a joyful, tax-free gift for the causes and values you most want to advance,” adds Bray. Unless Congress renews it, this may be the last chance to make an IRA Charitable Rollover.

Richard Bray is a strategic giving advisor to nonprofits, businesses and individuals fostering charitable giving and philanthropy that reflects your values and impacts our world. He can be reached at www.StrategicGivingAdvisor.com


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