Blom & Howell Financial Planning
  • Home
  • About Us
    • About Us
    • Our Team
    • SCF Securities
  • Services
    • Financial Planning
    • Retirement Planning
    • Investment Management
    • Social Security Planning
    • Insurance Planning
    • College Planning
  • Insights
  • Contact Us
  • Account Access
    • Wealthscape
    • eWealthManager
    • MoneyGuide Pro
  • Home
  • About Us
    • About Us
    • Our Team
    • SCF Securities
  • Services
    • Financial Planning
    • Retirement Planning
    • Investment Management
    • Social Security Planning
    • Insurance Planning
    • College Planning
  • Insights
  • Contact Us
  • Account Access
    • Wealthscape
    • eWealthManager
    • MoneyGuide Pro

INSIGHTS

CATEGORIES

All
College
Economy
Estate Planning
Financial Planning
Healthcare
Investing
Retirement
Social Security
Tax Strategy

Consider an IRA Charitable Rollover

4/25/2019

 
If you want a tax break and want to help a nonprofit, this may be a good move.
 
Have you ever wanted to make a major charitable gift? Would you like a significant federal tax break in acknowledgment of that gift? If so, an IRA charitable rollover might be a good option.
 
If you are age 70½ or older and have one or more traditional IRAs, you may want to explore the potential of this tax provision. In the language of federal tax law, it is called a Qualified Charitable Distribution (QCD) – a direct transfer of up to $100,000 in IRA assets to a qualified charity.
 
An IRA charitable rollover may help you lower your adjusted gross income (AGI). That may be a goal in your tax strategy, especially if your AGI is large enough to position you for increased Medicare premiums, greater taxation of your Social Security benefits, or exposure to the 3.8% investment income tax and the Medicare surtax.
 
Up to $100,000 may be excluded from your gross income during the year in which you make the gift. The gifted amount also counts toward your Required Minimum Distribution (RMD).
 
By the way, this $100,000 annual QCD limit is per individual taxpayer. If you are married, you and your spouse may gift up to $200,000 in a year through IRA charitable rollovers. Imagine lowering your household’s AGI by as much as $200,000 in a tax year.

The Internal Revenue Service will not let you claim the amount of a QCD as a deduction on Schedule A. (That would amount to a double tax break.)
 
You need not be rich to do this. When many people first learn about the IRA charitable rollover, they think it is only for multimillionaires. That is a misconception. Even if you do not think of yourself as wealthy, a QCD could prove a significant element in your tax strategy.
  
How does it work? Logistically speaking, an IRA charitable rollover has to unfold in a certain way. The custodian or trustee overseeing your IRA must either make the gift to the charity for you or give you a check made payable to the charity for the amount of the gift.
 
Do not simply take a distribution from your IRA and then write a check to the charity. That does not qualify as a QCD. If you make this mistake, the money you have taken out of your IRA will simply be included in your gross income for the year, and you may not even be able to claim a charitable contribution deduction for your efforts.
 
An IRA owner must be age 70½ or older to do this; the gifted assets must come from an IRA, or multiple IRAs, and are subject to RMD rules. (SEPs and SIMPLE IRAs are ineligible if an employer contribution has been made for the particular year.)
   
The charity or nonprofit involved must pass muster with the I.R.S. It must be a public charity eligible for charitable contribution deductions; that is, it must qualify as 501(c)(3) eligible. It cannot be a donor-advised fund or a private foundation. The charity should provide you with a letter of acknowledgement of your gift, for federal tax purposes. If that letter is not quickly sent to you, be firm in requesting it. It should state that you have received no gift, reward, or benefit from the charity in exchange for your contribution.
 
If you pledge a donation to a qualified charity or nonprofit, an IRA charitable rollover can be used to satisfy your pledge.
 
This tax break has been a boon to charities and IRA owners alike. Correctly performed, a charitable IRA rollover may help to lessen tax issues while benefiting qualified nonprofit organizations. 

Comments are closed.

    Categories

    All
    College
    Economy
    Estate Planning
    Financial Planning
    Healthcare
    Investing
    Retirement
    Social Security
    Tax Strategy

    Archives

    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    June 2018
    April 2018
    January 2018
    December 2017
    October 2017
    August 2017
    July 2017
    May 2017
    April 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    July 2016
    June 2016
    March 2016
    December 2015
    September 2015
    August 2015
    May 2015
    November 2014
    October 2014
    August 2014
    June 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    June 2013

    RSS Feed

Company

About Us
Services
Blog

Contact Us

Connect With Us

SEARCH

Find Us On Facebook
Connect on LinkedIn

Stay Connected. Stay Educated.
Sign up to receive our newsletter, market updates, and information on upcoming Blom & Howell events delivered straight to your inbox.
Sign up for our Newsletter
Blom & Howell Financial Planning, Inc. | 3340 Tully Road, Suite B-4, Modesto, CA 95350 | Phone: 209.857.5207 | Fax: 209.857.5098


Securities offered through SCF Securities, Inc. – Member FINRA/SIPC. Investment Advisory Services offered through SCF Investment Advisors, Inc. | 155 E. Shaw Ave. Suite 102, Fresno, CA 93710 | (800) 955-2517 | Fax (559) 456-6109. SCF Securities, Inc. and Blom & Howell Financial Planning are independently owned and operated. www.scfsecurities.com. Gary Blom - CA License #0C95684 | Michael Howell - CA License #0G72532. The SCF Securities registered representatives associated with this site may only discuss and/or transact securities with the residents of the following states:
​AZ CA CO HI ID IL MI OR TN TX WI