Are you over age 70 and have an IRA?

December 20, 2017

In order to help charities further their good work, Congress changed the rules for 2017 charitable gifts made from individual retirement accounts (IRAs).

If you are over age 70½, the federal government now permits you to rollover amounts from your IRA to charity without claiming any increased income or paying any additional tax. These tax-free rollover gifts could be $1,000, $10,000 or any amount up to $100,000 in one year. Here are a few reasons why you might want to take advantage of this special opportunity.

If you are like many individuals, your IRA has increased in value over the years and you have more income than you may need. The IRA rollover gift is a simple and easy way to provide for your favorite charity, while not increasing your taxable income. Simply contact your custodian and request that an amount be transferred to charity. Charity gets a nice gift and you avoid any additional tax.

Perhaps you have already made cash gifts to charity this year up to the Federal limit. Your charitable deductions for cash gifts are limited to 50% of
your adjusted gross income for a given year.

With an IRA rollover gift, you can transfer
excess funds from your IRA to charity and still make your regular cash gifts up to the Federal level. Give more without paying any more in tax.

Like many individuals, your IRA may be the largest asset in your estate. Your CPA may be looking for ways to save taxes. 
By making annual IRA charitable rollover gifts of up to $100,000, you can reach your goals of helping charity in a significant way and reducing taxable income.

There are also several ways that you can make a future gift of your IRA to charity.
  1. Designate your church or other charity as the beneficiary of your IRA. This permits you to continue to take withdrawals from your IRA during life and then leave the remaining value of your IRA to charity.  
  2. Make a future gift of your IRA to charity while providing life income to your heirs. Your family will receive fixed payments based on age at rates that can be as high as 10.5%.
  3. An IRA could also be transferred to a special “Give It Twice” trust, that usually provides income to children for a period of up to 20 years. After that time, the trust may pass to charity, creating a wonderful way for you to make a charitable gift.
For examples or help assessing the possibilities, please see the attached brochure.
The MidMaine Finance Committee, David McMahon, Chair