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IRA Makes Gift of a Lifetime

Posted on December 22, 2014

There is good news for community foundation donors in their 70s - and for the communities and causes they care about. A recently extended law makes it possible to give individual retirement account (IRA) assets to charity through 2014, free from federal tax. Prior to 2006, all lifetime distributions from IRAs were taxed - even those given to charity.

As such, our donors can give far more with less! This may be an attractive giving option for you if you are:

• Over 70½ and now receiving minimum IRA distributions - but do not need the extra income.
• Interested in making a significant lifetime gift to impact your community.

The Pension Protection Act of 2006 permitted individuals to roll over up to $100,000 from an IRA directly to a qualifying charity without being taxed. On December 19, 2014 President Obama signed into law H.R.5771, extending this unique charitable opportunity through 2014. Single and married individuals 70½ and older are eligible to give in this way from their individual retirement accounts.

Using IRA assets to make a gift during your lifetime, as opposed to giving via bequest in your will, enables you to experience the joy of making a major gift.

“This is a great option for donors who want to invest in the long term growth of their favorite charity,” said Lynn Alexander, vice president of the Community Foundation of St. Clair County.  “Gifts that are made to the endowment funds held at the Community Foundation are invested and permanently endowed.  That means the principal of the gift is never touched, and the earnings are made available to the organization to support their mission.”

Here’s an example:

Mr. Smith, age 75, has accumulated approximately $2,000,000 in his IRA accounts. He has other sources of wealth and has plans to leave a sizable estate to his heirs and charity. He is required to take a distribution from his IRA that is subsequently taxed.

Under this law, Mr. Smith can create, or add to, a fund at the community foundation to address the causes he cares about most by transferring IRA funds tax free. Mr. Smith can transfer up to $100,000 in 2014. In addition, if Mr. Smith is married, his wife can also make similar gifts from her IRA accounts, impacting the community in ways personal, unique and enduring.

For more information about the Charitable IRA Opportunity, contact Lynn Alexander at 810-984-4761 or .(JavaScript must be enabled to view this email address).

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