Retirement Accounts

Gifts during a donor’s lifetime
Donors aged 70 ½ or older are allowed to use the required minimum disbursement (RMD) from an IRA account to make a direct donation of up to $100,000 to a charity, tax-free. IRS tax information re: IRA contributions. While your client would not receive a charitable deduction for this type of gift, as the funds must go directly to a charity, your client would not have to claim it as income and would therefore not be taxed on the amount. After 9 years of this provision requiring yearly government renewal, it was made permanent as part of the Protecting Americans from Tax Hikes (PATH) Act in December of 2015. For more information on IRS restrictions related to this type of gift, click here.

Gifts of retirement accounts during a client’s lifetime example:

Gifts through a client’s estate distributions
Retirement funds paid to children upon a donor’s death can get hit with heavy income and estate taxes (sometimes up to 70%), however they are tax-free when passed to a charity.

By naming a charity as the beneficiary of a retirement plan, your client may give these heavily-taxed assets to charity, while leaving more favorably-taxed property to family.

 Gifts of retirement accounts through client’s estate example: