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Charitable use of IRA is a nailbiter

Posted on Dec 18, 2014, by

It seems like season-ending cliffhangers have become as much a part of legislating charitable IRA distributions as they are for bad TV dramas.

Once again this year, Congress waited for the final reel to save charitable distributions from IRAs from certain death. If you are at least age 70 1/2 and have a traditional (not Roth) IRA, you can arrange a direct transfer of a distribution to a qualified charity and exclude that distribution from your taxable income. The exclusion is allowed for contributions of up to $100,000 for both you and your spouse.

But this is a limited engagement. You must make the transfer by Dec. 31, 2014, and it must go directly to charity for you to get the tax advantages. You lose that benefit if you withdraw the money from your IRA and then make a gift to a charity.

I don’t know who plays the hero or the villain in this drama, but I am sure the Community Foundation can play a supporting role. A charitable fund at the Foundation is perfectly cast for handling a quick-turnaround transaction like this.

You can transfer your IRA distribution to certain types of existing funds (including designatedfield of interest, scholarship and unrestricted funds) or one you establish at the Community Foundation, and we can help make the immediate transaction go smoothly.

Not everyone can spare a significant portion of their IRA distribution but for those who can, this is a win-win for your favorite nonprofit and your tax exposure. Please call if I can be of assistance.

Bob Ellis is Vice President for Development and Donor Services and the Community Foundation for the Fox Valley Region. Email him at [email protected]

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