The Episcopal Church of The Holy Innocents
Charitable Giving Through an IRA
Here is a summary of our Coffee Hour & Conversation from 3/1/20 which focused on qualified charitable giving through an IRA. Joining us was Amy Haig, a Certified Financial Planner and Wealth Management Advisor at Merrill Lynch. Amy is also our ML Advisor at Holy Innocents’ and manages a portion of our portfolio. She and her family reside in Beach Haven; her daughters are graduates of HI Preschool!
Amy explained that if you have an eligible IRA, there are provisions to give to a charity, such as your church, or a legacy gift through IRA distributions. One of the primary benefits of this strategy is that you may be able to make a federal tax-free charitable distribution from your IRA. There are qualifications and rules to consider and Amy emphasized that anyone considering this strategy should consult their financial and tax advisors to see if it is right for them.
Amy further explained the basic concepts of this strategy. Those 70 ½ or older can transfer money from a qualified IRA to a charity (or several) tax-free each year. These monies would count as part of your Required Minimum Distributions (RMDs) without being added to your adjusted gross income. Your charitable gift won’t be taxed, as it would be if you were to take a distribution and then donate the cash to charity. Your charitable dollars go further if you aren’t paying taxes on them. The donation isn’t deductible, but it will lower your modified adjusted gross income. The distribution must be paid directly to the qualified charity and would be set up directly with your financial institution. Again, consult with your financial institution and tax advisor.
Also introduced briefly, were new changes to retirement plans that were approved by Congress in January 2020 through the SECURE Act, the acronym for Setting Every Community Up for Retirement Enhancement. The age at which you must begin taking Required Minimum Distributions from retirement accounts has been changed from the year in which you turn age 70 ½ to the year in which you turn age 72. If you don’t need to access your RMD for income, the SECURE Act provides more time for your savings to grow tax deferred and longer for you to add to these retirement funds.
Pat Peacock, Stewardship Chair