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    Charitable IRA Gifts

    Uploaded by

    Doug Potash
    This document discusses the tax benefits of making charitable donations directly from an IRA account, known as a qualified charitable distribution (QCD). It notes that in 2013 individuals aged 701⁄2 or older can donate up to $100,000 from their IRA to charity tax-free. This allows donors to satisfy required minimum distributions without increasing their taxable income. A QCD can also help lower one's taxable estate and allow donations over 50% of adjusted gross income. The donation must be made directly from the IRA as a trustee-to-trustee transfer to qualify for these tax benefits.

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    Charitable IRA Gifts

    Uploaded by

    Doug Potash
    63 views2 pages
    This document discusses the tax benefits of making charitable donations directly from an IRA account, known as a qualified charitable distribution (QCD). It notes that in 2013 individuals aged 701⁄2 or older can donate up to $100,000 from their IRA to charity tax-free. This allows donors to satisfy required minimum distributions without increasing their taxable income. A QCD can also help lower one's taxable estate and allow donations over 50% of adjusted gross income. The donation must be made directly from the IRA as a trustee-to-trustee transfer to qualify for these tax benefits.

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    In 2013, you can once again donate up to $100k to a charity tax-free

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    This document discusses the tax benefits of making charitable donations directly from an IRA account, known as a qualified charitable distribution (QCD). It notes that in 2013 individuals aged 701⁄2 or older can donate up to $100,000 from their IRA to charity tax-free. This allows donors to satisfy required minimum distributions without increasing their taxable income. A QCD can also help lower one's taxable estate and allow donations over 50% of adjusted gross income. The donation must be made directly from the IRA as a trustee-to-trustee transfer to qualify for these tax benefits.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    63 views2 pages

    Charitable IRA Gifts

    Uploaded by

    Doug Potash
    This document discusses the tax benefits of making charitable donations directly from an IRA account, known as a qualified charitable distribution (QCD). It notes that in 2013 individuals aged 701⁄2 or older can donate up to $100,000 from their IRA to charity tax-free. This allows donors to satisfy required minimum distributions without increasing their taxable income. A QCD can also help lower one's taxable estate and allow donations over 50% of adjusted gross income. The donation must be made directly from the IRA as a trustee-to-trustee transfer to qualify for these tax benefits.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Charitable IRA Gifts

    In 2013, you can once again donate up to $100k to a charity tax-free. Provided by Doug Potash The IRS extends a major tax break. Thanks to the American Taxpayer Relief Act of 2012, charitable IRA gifts are once again allowed in 2013. An IRA owner aged 70 or older may gift up to $100,000 this year to either a 170(b)(1)(A) public foundation or a 501(c)(3) charity. Congress may elect to extend this opportunity in 2014 and subsequent years.1,2 What do you gain by doing this? The possible tax benefits of a qualified charitable distribution (QCD) from an IRA are threefold. A QCD counts toward your RMD, but it doesnt count as taxable income. If you dread mandatory IRA withdrawals and the taxes that come with them, you should know that a charitable IRA gift can be used to satisfy all or part of the annual Required Minimum Distribution. At the same time, the contribution amount is excluded from your gross income. With higher tax rates and surtaxes kicking in this year, reducing your AGI may be a priority.1,3 A QCD can help you reduce the size of your taxable estate. Most of the money in a traditional IRA will eventually be taxable. Donating some or all of these assets to charity will lower your taxable estate dollar for dollar. (As you can surmise, QCDs are more beneficial to traditional IRA owners than Roth IRA owners from this standpoint.)3,4 A QCD could also help you contend with charitable donation limits. You may reach a point where you would like to donate an amount greater than 50% of your AGI to charity. Normally, the IRS doesnt allow that but charitable IRA gifts don't count against that 50% limit as they arent included in a taxpayers gross income. While a charitable IRA gift isnt tax-deductible, you may not itemize to begin with many retirees just take the standard deduction.3 How do you do this? To realize most or all of these tax perks, the gift has to take the form of a qualified charitable distribution (QCD), alternately known as a trustee-to-trustee transfer or IRA charitable rollover. In other words, the financial firm serving as the trustee of your IRA writes a check directly to the charity. A financial professional you know and trust can help you fill out the accompanying paperwork.2 If the IRA trustee makes the check payable to you and you deposit it and write a check for the equivalent amount made payable to the charity, it is a taxable event and the whole purpose of the charitable IRA gift is defeated. Should you make that blunder, you will have to declare the income and just take a normal charitable deduction on the donation.2

    What does the fine print say? To make a QCD, you have to own an IRA and be age 70 or older. You cant make a QCD from an employer-sponsored retirement account such as a 401(k) or 403(b); in fact, you cant make a QCD from a SEP or Simple IRA either. 1,2 The QCD cant be made in a way whereby you would derive benefits from the charity or foundation later. It cant become the basis of a charitable remainder trust or a gift annuity, for example. A QCD also cant be made to a donor-advised fund (via which the contributed assets would be invested and grow tax-free prior to the actual charitable donation).2 A QCD cant be a split interest gift. The amount of the QCD must otherwise have been considered taxable income, and you are not permitted to claim a charitable deduction for it. 2 Help a charity, help your financial situation. If you are well off and dont really need or want the additional income and income taxes that would result from your RMD, a charitable IRA gift may offer you a solution with the flavor of a win-win a boon for the charity, a tax break for you and/or your heirs.
    Doug Potash may be reached at 443-837-2550 DouglasPotash@PremierPlanningGroup.com PPG, 115 West St #400, Annapolis, MD 21401 www.premierplanninggroup.com
    This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

    Citations.
    1 - irs.gov/Retirement-Plans/Charitable-Donations-from-IRAs-for-2012-and-2013 [5/1/13] 2 - fpanet.org/ToolsResources/ArticlesBooksChecklists/Articles/CharitablePlannedGiving/QualifiedCharitableDistributionsfor2012and2013/ [1/29/13] 3 - bankrate.com/finance/taxes/gifts-to-charity-pay-off-on-your-taxes-1.aspx [1/10/13] 4 - fidelitycharitable.org/giving-strategies/advisors/donating-retirement-assets-to-charity.shtml [5/7/13]

    Doug Potash is a Registered Representative offering securities through Cambridge Investment Research, Inc., Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a federally registered investment advisor. Cambridge and Premier Planning Group are not affiliated.

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