Making Charitable Contributions Directly from an IRA
The opportunity to make charitable contributions directly from an IRA has been extended to December 31, 2009. (There is pending legislation that may make this option permanent.)
For anyone planning to donate money to a charity a direct IRA-to-Charity contribution is a nice option to consider.
Who may use it:
IRA owners over the age of 70½.
How much may be transferred directly to the charity:
Up to $100,000 per year: (For now please assume that this feature will expire 12-31-2009).
Required Minimum Distribution (RMD):
The transfer to the charity can be used to satisfy the IRA owners RMD.
Why is this benefit?
Normally if an IRA owner wanted to make a charitable contribution they might take a distribution from their IRA, reporting that amount as income and then make the contribution which would be a deduction. On the surface there seems to be no real advantage to making the charitable contribution directly from the IRA. However, by making the direct contribution the funds that were inside your IRA never hits your 1040 form. This means, there is no loss of deductions because of higher earnings and no social security tax on the amount.
Who may not use this feature?
Persons under 70½, or a person who is transferring funds from an employer plan such as a 401(k).
Can you still deduct the charitable contribution?
No, as you never reported the income, there is not deduction allowed for the contribution.
Question: The charity I have in mind provides services to me, will that affect the transfer?
Yes, let’s say you live in a home provided by the charity or the charity regularly provides you with a service; than the contribution may not be made by direct transfer.
Question: My spouse and I are both over age 70½ and both have IRAs. Can we both make a direct charitable contribution?
Yes
How do we do this?
First contact the charity. They must provide you with the paper work that the IRS will want to verify the contribution.
The opportunity to make charitable contributions directly from an IRA has been extended to December 31, 2009. (There is pending legislation that may make this option permanent.)
For anyone planning to donate money to a charity a direct IRA-to-Charity contribution is a nice option to consider.
Who may use it:
IRA owners over the age of 70½.
How much may be transferred directly to the charity:
Up to $100,000 per year: (For now please assume that this feature will expire 12-31-2009).
Required Minimum Distribution (RMD):
The transfer to the charity can be used to satisfy the IRA owners RMD.
Why is this benefit?
Normally if an IRA owner wanted to make a charitable contribution they might take a distribution from their IRA, reporting that amount as income and then make the contribution which would be a deduction. On the surface there seems to be no real advantage to making the charitable contribution directly from the IRA. However, by making the direct contribution the funds that were inside your IRA never hits your 1040 form. This means, there is no loss of deductions because of higher earnings and no social security tax on the amount.
Who may not use this feature?
Persons under 70½, or a person who is transferring funds from an employer plan such as a 401(k).
Can you still deduct the charitable contribution?
No, as you never reported the income, there is not deduction allowed for the contribution.
Question: The charity I have in mind provides services to me, will that affect the transfer?
Yes, let’s say you live in a home provided by the charity or the charity regularly provides you with a service; than the contribution may not be made by direct transfer.
Question: My spouse and I are both over age 70½ and both have IRAs. Can we both make a direct charitable contribution?
Yes
How do we do this?
First contact the charity. They must provide you with the paper work that the IRS will want to verify the contribution.
FREE - IRA ALERT the Newsletter for IRA Owners.
For a free one year subscription go toIRAclub.org and click on “Free IRA Newsletter”
For a free one year subscription go toIRAclub.org and click on “Free IRA Newsletter”
The IRA Club offer Self Director IRAs and Checkbook IRA for investors who seek to take control of their funds. A self directed IRA can be opened for as little as $49.
Dennis Blitz Web Site: IRAclub.org
The IRA Club E-mail: dblitz@IRAclub.org
Chicago, IL Phone 312-795-0988 Ext 11
No comments:
Post a Comment