Do you make regular charitable gifts to your church, synagogue, or other worthy cause?
Are you over the age of 70 ½ and taking minimum required distributions (MRDs) from your IRA?
Do you have sufficient income from sources other than your IRA to meet your living needs?
I you can answer yes to these three questions, then making charitable gifts from your IRA may be a strategy that can be financially rewarding for you both you and the charity you support. This is because under current law, you can exclude from gross income up to $100,000 in “qualified charitable distributions” from either a traditional IRA or a Roth IRA.
Although charitable IRA distributions are not deductible as charitable contributions, the exclusion from gross income generally represents a better result than taking a taxable distribution personally, and then donating the same amount to charity. This is because qualified charitable distribution is not subject to the same limitations as the charitable income tax deduction.
It’s important to consider your financial and tax situation before deciding whether to make a charitable contribution from your IRA. Be sure to work closely with your financial and tax advisors to determine whether this strategy is right for you.
If you have questions regarding making charitable gifts from your IRA, or other estate planning questions, please call us at (513) 985-2500.
Paul Kellogg is an attorney in Cincinnati with the Phillips Law Firm, Inc. Paul’s practice focuses on providing comprehensive estate planning and probate services to families and business owners, as well as providing guidance to entrepreneurs and businesses on a wide variety of transactions and disputes. He can be reached at (513) 985-2500 or via email at [email protected]. Please explore Paul’s other articles on estate planning and business on the Phillips Law Firm Blog page.
