Gifts from IRAs and Other Retirement Plans
The Secular Coalition for America Education Fund is deeply grateful to those friends who, through their IRAs and other retirement plans, make a gift to ensure that the separation of Church and State remains a cornerstone American value.
Contributions from retirement accounts are one of the most tax-efficient ways to make a charitable donation, since you can avoid the income taxes due on plan distributions, and the charity receives the full value of that distribution. The Secular Coalition for America Education Fund (Tax ID# 26-1891218) is a qualified charitable organization for receiving tax-deductible contributions.
Tax-Free IRA Distributions if you are over 70½ years old
If you are forced to take a required minimum distribution (RMD) that you do not need, you can instead make a tax-free Qualified Charitable Distribution to the Secular Coalition for America Education Fund.
The IRA charitable rollover provision allows IRA owners age 70 ½ and older to donate as much as $100,000 a year directly to one or more qualifying charities. The donations, which count as part of the IRA owner's required annual withdrawal, are excluded from the taxpayer's income. Married individuals who are both over 70 ½ may transfer up to $100,000 from each spouse's own IRA.
Who is most likely to benefit from using the IRA charitable rollover?
- Taxpayers with significant charitable contributions. Charitable deductions cannot exceed 50% of a taxpayer's adjusted gross income in any year. Those who make significant contributions can benefit from the rollover, since this technique does not rely on the charitable deduction, which contains the percentage limit.
- Taxpayers subject to a state income tax. Several states do not permit a state income tax charitable deduction. By using the rollover, state income tax may be reduced.
- Taxpayers who may be subject to the AMT. Certain itemized deductions, including those for state income taxes and real estate taxes, can cause a taxpayer to become subject to the federal alternative minimum tax (AMT). Residents of states with high income taxes are more likely to be subject to AMT, which may make the exclusion of IRA charitable rollovers from income more attractive.
- Taxpayers who do not itemize. Individuals who do not itemize deductions (but plan to make charitable contributions) can benefit by using IRA charitable rollovers. Because they use the standard deduction, they would not normally save income taxes by making a charitable contribution. The IRA charitable rollover permits a non-itemizer to exclude the distribution from income and pay less income tax.
How To Charitable Rollover Directly from Your Traditional IRA
- 1. Contact your IRA trustee or custodian and instruct them to make a transfer from your IRA directly to the Secular Coalition for America Education Fund. (Note: To qualify, the rollover must pass directly to the Secular Coalition for America Education Fund. The rollover cannot, for example, be transferred to a non-IRA account of yours as an intermediate step or be a check made out to you.)
- 2. Your IRA trustee or custodian will then send a check or transfer to the Education Fund. Many trustees and custodians already have forms and procedures in place to make this transfer.
- 3. Receive a letter of acknowledgement from the Secular Coalition for America Education Fund.
Tax-Deductible IRA Distributions if you are over 59½ years old
If you are over 59 ½ year old, you can take distributions from your IRA and other retirement plans without penalty. In most cases those distributions will be treated as taxable income. Donations to the Secular Coalition for America Education Fund can then be taken as a deduction to offset that income, subject to some of the constraints mentioned above.
There are no annual limits to the amount you can withdrawal and donate. With proper planning, gifts from an IRA can not only escape state and federal income taxes, but it may also avoid any potential federal estate tax.
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.
Legacy Gifts at Any Age
IRAs and other retirement plans are a tax-wise way to make charitable gifts and to leave a legacy of secular values.
If you leave an IRA to relative, they will only receive a portion of the IRA amount since they will need to pay state and federal income taxes on any amount withdrawn from the IRA. Leaving an IRA to a charitable organization will insure that the full amount will go to a good cause. Not only may this gift escape state and federal income tax, but it may also avoid any potential federal estate tax.
Making planned legacy gifts is as easy as changing the beneficiary designation on a form with your IRA or retirement plan administrator. You can make the Secular Coalition for American Education Fund either a primary beneficiary or a contingent beneficiary if your primary beneficiary is not alive or disclaims the gift.
The proper way to specify us as a beneficiary is: Secular Coalition for America Education Fund, tax ID #26-1891218, 1012 14th Street, NW, Suite 205, Washington, DC 20005.
This page is for general education on gifts through IRAs and other retirement plans. Your circumstances could be different than those described above. Please see your tax or legal professional to determine your particular tax situation.
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