It comes down to the wire every year, but in 2015 the result was a little different.
Congress has again reauthorized direct charitable gifts from IRAs. For someone at least age 70 ½ who doesn’t need a required distribution to meet his or her personal needs, giving to a favorite charity directly from an IRA can be one of the most tax-advantaged ways to make a gift.
You pay no federal income tax on money donated from an IRA to a charity. For many – although currently not Wisconsin residents – there may also be state income tax savings.
It is important that you don’t withdraw the funds prior to a gift, but instead to have the gift amount distributed directly from an IRA to one or more qualified charities. You must be age 70½ or older, and the amount distributed for charitable purposes can satisfy all or a portion of a required minimum distribution.
On Dec. 18, Congress passed and the president signed legislation retroactively extending IRA charitable distributions for 2015. The PATH Act of 2015 (Protecting Americans from Tax Hikes) also makes this provision permanent for future years. No more waiting until late December for Congress to take action.
The gift may be made from either a traditional or Roth IRA, but not an employer plan. A total of up to $100,000 per individual may be transferred directly to one or more qualified charities, including to a community foundation designated, scholarship or field of interest fund. Donor-advised funds and private foundations are not eligible.
If you have questions, call me at (920) 830-1290 or contact your IRA administrator or tax advisor for more information.
• Email VP Development and Donor Relations Bob Ellis at [email protected].