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Community Foundation of White County

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  • Leslie Goss

Your IRA - A Smart Giving Tool

Do you have an IRA? Are you in an age bracket that requires you to make a withdrawal

from your account? If so, read on!

Federal law allows IRA owners to share the wealth of those retirement savings by

assigning disbursements directly to charity, without first counting those dollars as income – and thereby avoiding income tax. If you don’t take your distribution, you’ll be giving Uncle Sam a nice present (and my bet is that he isn’t first on your gift list!).

Use of IRA mandatory distributions for charitable donations creates a win-win

opportunity: nonprofit agencies and programs can receive much-appreciated resources, and the IRA owner pays no taxes on the portion withdrawn from the account.

Thanks to decades of deliberate saving, many retirees have a substantial amount of

money in their IRAs. Careful and deliberate planning should be used to maximize the benefits of these accounts. For example, designating children as beneficiaries of these accounts can be very expensive, tax-wise. Using retirement accounts for charitable giving is, in many cases, a much better plan.

The charitable rollover allows holders of IRAs who are at least 70½ years old to make

direct charitable transfers up to $100,000 from their accounts; that is, the gift must be transferred directly from the account to the charity in order to qualify under this provision. By going directly to charity, the money is not included in the IRA owner’s income and is not taxed, preserving the full amount for charitable purposes.

As a qualified public charity, your Community Foundation of White County can help you

execute the transfers and choose from charitable fund options for your gift. Though Donor

Advised Funds do not qualify for tax-free IRA transfer (because the donor remains in an active advisory capacity regarding the use of funds), designated beneficiary funds, field of interest funds, and unrestricted gifts to community foundations all qualify under this provision.

This provision makes no change to the rules that govern charity bequests of IRA assets,

either outright to charities or to deferred giving arrangements. Such transactions already qualify for favorable income tax consequences and will continue to be an attractive planning strategy for charitable givers.

We are grateful that Congress passed legislation in 2015 that makes this philanthropic

opportunity a permanent option for charitably-minded donors. Definitely a win-win and a smart giving tool!

If you own an IRA, must take a distribution, and would like to make a positive difference

in your community, contact Community Foundation Director Leslie Goss at 574-583-6911.

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