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Retirement assets & charitable giving

What’s an IRA C.R?

The “IRA charitable rollover” law expired last year. This law had allowed donors over 70½ to make direct distributions of up to $100,000 per year to charity, but expired on December 31, 2014. As of this writing, it is uncertain whether the IRA C.R. will be extended either this year or in the future.

Since 2006 or so, many charities promoted retirement plan gifts by focusing on special benefits offered bu the now-expired IRA C.R. Donors should be made aware that there are several other ways to make gifts from retirement plans under existing law — and these gifts may be very tax savvy. Two easy ways to direct retirement assets to your favorite charity:

  • Gifts at death via beneficiary designations
  • Withdrawals by those over 59½ followed by outright deductible gifts that can effectively result in tax-free retirement plan gifts

Note also that the IRA C.R. applied only to traditional and Roth IRAs. These two options – gifts at death via beneficiary designations and withdrawals by those over 59½ – will work with virtually all qualified retirement plans, including 401(k)s and 403(b)s.

Naming a beneficiary

Donors considering charitable bequests may not realize that they can also make a meaningful gift simply by naming a favorite charity as the beneficiary of an IRA, 401(k), 403(b), or other retirement plan. Giving retirement assets in this way should be easy to execute and does not require drafting or amending a will or living trust. Donor simply has to contact the financial institution holding the retirement asset and request a change of beneficiary form.

Keep in mind, however, that if the account holder is married, the spouse should be informed and may have to consent to the gift. The plan assets may also be left to a charitable or marital trust[s]. In these cases professional advisors should be consulted.

Give now!

Depending on all circumstances, donors may also choose to make current gifts using funds withdrawn from their qualified retirement plans. Individuals over 59½ may generally withdraw funds from retirement plans without penalty, make a gift with these funds, and then claim an offsetting charitable deduction. In most cases, a gift made in this manner will result in a “wash” for tax purposes.

Gordon Fischer Law Firm, P.C. is dedicated to promoting and maximizing charitable giving in Iowa. Gordon can be reached by phone at 515-371-6077; by email at gordon@gordonfischerlawfirm.com; and through his website at www.gordonfischerlawfirm.com.

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