There is good news for community foundation donors in their 70s—and for the communities and causes they care about. A permanent law makes it possible to give individual retirement account (IRA) assets to charity, free from federal tax, annually. Prior to 2006, all lifetime distributions from IRAs were taxed—even those given to charity.

As such,  donors can give far more with less! This may be an attractive giving option for you if you are:

  • Over 70½ and now receiving minimum IRA distributions—but do not need the extra income.
  • Interested in making a significant lifetime gift to impact your community.

The Pension Protection Act of 2006 permitted individuals to roll over up to $100,000 from an IRA directly to a qualifying charity without being taxed. On December 18, 2015, Congress passed the PATH Act, making permanent this unique charitable giving opportunity. Single and married individuals 70½ and older are eligible to give in this way from their individual retirement accounts.

Using IRA assets to make a gift during your lifetime, as opposed to giving via bequest in your will, enables you to experience the joy of making a major gift.

Mr. Smith, age 75, has accumulated approximately $2,000,000 in his IRA accounts. He has other sources of wealth and has plans to leave a sizable estate to his heirs and charity.

Under this law, Mr. Smith can give a gift to an existing fund or create a new fund at the community foundation to address the causes he cares about most by transferring IRA funds tax free. Mr. Smith can transfer up to $100,000 in 2018. In addition, if Mr. Smith is married, his wife can also make similar gifts from her IRA accounts, impacting the community in ways personal, unique and enduring.

“We’re ready to help our donors take advantage of this opportunity and make gifts during their lifetimes. Whether you want to give to an existing fund or start a new fund, our personalized service and local expertise helps donors address the issues and causes most important to them,” said Dana Bensinger, Otsego Community Foundation Executive Director.

For more information on the charitable giving legislation and the Charitable IRA opportunity, please contact your professional financial advisor or Dana Bensinger at 989-731-0597.