As part of your estate plan, the gift offers significant tax savings
For many people, a retirement account such as an IRA or 401(k) is the most significant source of assets accumulated in their lifetime. Others find that, because of other resources and investments, they are not in need of all the funds accumulated in their retirement accounts. For those, a natural question is whether they can donate retirement assets to Jewish Voice – and if doing so would result in any tax advantages.
It is always possible to donate retirement assets, including an IRA, 401(k) or 403(b). The most direct procedure is to cash out the asset, pay the income tax attributable to the distribution, and then contribute the proceeds to charity. In many cases, however, there is little to no tax benefit associated with that type of donation.
There is a better alternative. When you make a direct contribution of retirement assets to Jewish Voice as part of an estate-planning strategy, it can be very tax-efficient. In some situations, it can translate to more funds for both Jewish Voice and your heirs.
Here are answers to some other questions related to donating retirement assets:
A. Virtually any money that resides in a retirement account requires some extra steps to donate your Required Minimum Distributions (RMDs).
The only account types that are eligible for the Qualified Charitable Distribution (QCD) are from IRAs, Inherited IRAs, SEP IRAs and SIMPLE IRAs (the latter two only if in inactive plans).
If you are taking Required Minimum Distributions from a 401(k) beginning at age 70 1/2 and want to contribute to Jewish Voice and also save on taxes, you will need to first roll over your 401(k) to an IRA. This will often keep you from a higher tax bracket and may qualify you for certain tax credits and deductions. You should consult with your tax advisor regarding your specific situation.
In a nutshell, your contribution must be a direct transfer from the IRA custodian payable to a qualified charity. Congress permanently allowed this provision in 2015. Jewish Voice is a qualified charity.
A. IRS rules state that:
- You must be at least 70 1/2 at the time you request the QCD
- The funds must go to the charity before Dec. 31 of that year
- The check must be written directly to the charity.
Give us a call at 855-550-1455 to speak to a JVMI representative about donating a Retirement Minimum Distribution (RMD) gift, and we will connect you to the Financial Planning Department.