Graland grandparent, Donald Dolan, likes to make his charitable gifts from his IRA. He should know. Now retired, Don enjoyed a successful career as a wealth advisor and director with Abbot Downing. Don knows that making gifts through a qualified charitable distribution is a smart and easy way to make a meaningful philanthropic gift.
"I give because I love the school. Graland provides a wonderful supportive education for my grandsons. I give through my IRA because this way my gift is fully tax-free," he says.
The SECURE (Setting Every Community Up for Retirement Enhancement) Act, which became effective earlier this year, included a few changes to retirement plans. Here are the highlights:
- You now have more time to contribute to your IRA—past the age of 70½. This change gives your account additional time to grow.
- The required minimum distribution age has shifted from 70½ to 72 for those born on or after July 1, 1949. (Note: The RMD requirement has been waived for 2020, per the CARES Act signed into law on March 27, 2020.)
- As a donor, you don't have to wait to make your qualified charitable distribution until age 72. By starting at age 70½ you can make a difference today, while receiving benefits in return.
- These gifts don't count as income. It is important to ensure that the distribution gift is made directly from your IRA account to Graland to ensure that you are not taxed for this gift. If you take the deduction and then give it to the school, those dollars will be taxed.
By making gifts in this way, you are leveraging one of your most highly taxed assets. By making a gift to a non-profit, your gift is fully tax-free. Alternatively, when IRAs are passed to loved ones, distributions from these accounts are subject to income taxes at the beneficiary's ordinary income tax rate, which can be as high as 37%.
Make sure to consult your financial advisor for additional information about the ramifications of the SECURE Act and how you can take advantage of the new rules. Contact Jessica Goski at email@example.com or 303-336-3705 to learn more.
Information contained herein was accurate at the time of posting. The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.