Donating IRA Assets to Charity

Donating IRA assets to a charity of your choice is one of the simplest ways to have a significant impact on the future. When you find a non-profit whose cause aligns with your values, you have two great options to use your IRA account to the max.

Option #1: When you see your IRA account value increasing, review your beneficiary designations. It might be time to consider adding a charity as a beneficiary. A qualified non-profit or religious organization can receive the account tax-free. Naming family members (though not your trust) as a beneficiary can pass your IRA account on tax free, as long as they take it as a rollover IRA. A charity can receive all the assets, without tax on the income. This allows you to continue using your IRA assets during your lifetime.

Don’t name your trust on the IRA beneficiary designation form because it will incur tax on all of the income accumulated. This is a general rule but there are some exceptions. Check with your tax advisor and attorney. An example is given in Peter’s Story.

Option #2: You can maximize the tax benefit to yourself by turning your required distributions into charitable donations. This can provide you with significant tax benefits while giving your choice of charity current income. The SECURE Act of 2015 tax package allows you to give your IRA withdrawal directly to a charity. This is known as a Qualified Charitable Distribution (QCD). During tax year 2020 and 2021, the Consolidated Appropriations Act extends the annual limit of the contribution to 100% of your AGI. This allows you to match your income with direct gifts to a charity of your choice, from your IRA account, without a tax penalty!

If your IRA assets have grown but you do not need the cash flow from your RMD, use this method to benefit your chosen charity and save on your taxes. Consult with your tax advisor.

The Ace Fiduciary Group, A Non-Profit Corporation is a qualified 501 c (3). Your donations help support our programs to serve the orphan elders in our community. We appreciate your donations. Please contact us if you would like to discuss how our vision for future programs might fit into your vision for a better future in our community.

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Loren Emmanuel