Maximizing Your Gift – Part III

In this part of the series, I’ll discuss an option available to those of you who are 70½ or older and have an IRA.  People who fit this category are required to take a fully-taxable distribution from their IRA.  But there is an alternative, you can have the IRA administrator send the distribution directly to a charitable organization.  This will satisfy your Required Minimum Distribution (RMD) without incurring a tax on the amount (the gift to the Church is NOT deductible on Schedule A, however).

The benefit to you is similar to the appreciated stock alternative discussed last week.  If your RMD is $3000 and you take that out, after taxes you might have only $2200 net.  You could give that $2200 to the Church and get a tax deduction (if you itemize) worth about $500.  But if you transfer the $3000, the Church receives $800 more.

It is important to note that the money must go directly to a charitable institution (you can’t move this to a charitable gift trust).  Also, your IRA administrator may limit the number of such gifts you can make, or the minimum amount for each withdrawal. Therefore, this is best used for your largest charitable gifts.

If you have any questions or would like further information, please let me know.

Don Stimpert, Assistant Treasurer
email Don at don.stimpert@gmail.com 

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