STRATEGIC GENEROSITY

Advancing your generosity and giving goals

Solutions to help mitigate the tax bite and support your favorite charities

Gifting Required Minimum Distributions from a Traditional IRA

Frustrated by taking required distributions at age 72? Did you know that instead of receiving a taxable required minimum distribution, you can send those distributions (up to $100,000) directly to a qualified charity and avoid the tax? The check must go directly to the charity. This could be a win-win, the charity benefits, and so will you if you itemize tax deductions.

    Gifting from an Inherited Traditional IRA

    When you are required to take a distribution from an Inherited IRA, you owe tax on the amount of the distribution, but you do not pay a 10% penalty. You can send those distributions (up to $100,000) directly to a qualified charity and avoid the tax. The check must go directly to the charity.

    Gifting from an Inherited Roth IRA

    Designated beneficiaries who are not a minor child, a spouse or disabled and own an inherited Roth IRA must distribute the entire account within ten years of the original owner’s death. Distributions generally will not be taxed. However, these accounts can also be a gifting source, but should be considered in the context of the long-term tax-free wealth accumulation.

      Naming Charities as a Primary Beneficiary of a Traditional IRA

      Ever thought about a legacy gift? Naming a qualified charity as the primary beneficiary for all or part of your IRA’s can accomplish this.  Naming a charitable organization is easy and may result in substantial tax savings for a donor’s heirs and estate.

      You can also name a trust as a primary beneficiary of an IRA. This can go horribly wrong if done incorrectly. A trust can unwittingly limit the options of beneficiaries. The trust needs to be drafted by an attorney who is experienced with the rules for leaving IRA’s to trusts. We can help you, don’t try this on your own.

      Donor Advised Funds

      Assets held in qualified accounts like IRA’s cannot not be gifted to a Donor Advised Fund. However, highly appreciated assets that are not held in a qualified account can also be gifted, in kind, to a qualified charity. Selling a highly appreciated asset and then gifting cash from the sale results in capital gains taxes. Gifting the asset directly to the charity would avoid any taxes. You may also be eligible for a tax deduction for the gift if you itemize. Be careful here, there are special rules for claiming deductions of property.

      If you are not sure what charity you want to support, but would like a current year tax deduction, consider a Donor Advised Fund. You can decide what charity you would like to support at a later date. A Donor Advised Fund is a private fund administered by a third party, such as Charles Schwab, Fidelity, or Vanguard. It is created for the purpose of managing charitable donations on behalf of an organization, a family, or an individual.  The biggest advantage of Donor Advised Funds lies in the immediate tax benefits.

        Start the conversation today, talk to us. We have professionals available to answer your giving questions.

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