Special Tax Bill Includes Extended Help for Charities

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Provision Permits Tax-free Charitable Transfers from IRAs

On December 18, Congress passed the PATH Act, which renews and makes permanent the Charitable IRA provision of 2006, making it easier for Americans to give to causes they care about. This provision has the power to help local charities strengthen their communities by allowing individuals to roll over up to $100,000 annually from an Individual Retirement Account (IRA) to charity without being federally taxed.

Millions of Americans continue to save pre-tax dollars in their IRAs. The law allows taxpayers 70 ½ and older to share their wealth by giving retirement savings directly to charity—and bypassing income tax. (source: http://www.ici.org/research/stats/retirement/)

This law is important to local charities operating as agents of philanthropy in order to continue to build community and improve social service programs that benefit people every day.

“It is a win-win—for people who would rather give to charity than pay taxes and for the nonprofit organizations they choose to support,” said Charles M. Barber, The Luzerne Foundation President & CEO.

Thanks to decades of deliberate saving, some of today’s retirees have more money in their IRAs than they need for daily living expenses and long-term care. Charitable individuals and couples have expressed an interest in giving the funds to charity, but income tax must be paid on all withdrawals, which reduces the value of the gift. Others are concerned about designating their children as IRA beneficiaries, since that may draw unintended tax consequences.

“For larger estates, a good portion of IRA wealth goes to estate taxes and income taxes of beneficiaries,” Barber said. “Experts estimate heirs may receive less than 50% of IRA assets that pass through estates.” A provision in the federal law extends this special option: transferring IRA assets directly to charity. By going directly to a qualified public charity such as The Luzerne Foundation, the money is not included in the IRA owner’s income and—most important—is not taxed, preserving the full amount for charitable purposes.

Annually, holders of traditional IRAs who are at least 70½ years old can make direct charitable transfers up to $100,000. Individuals may exclude the amount distributed directly to an eligible charity from their gross income. The Luzerne Foundation can help donors execute the transfers and choose from several charitable fund options for their gift. Donor Advised Funds do not qualify for tax-free IRA transfers.

“This really is a powerful and limited opportunity. The window is open now, but will close at the end of the year,” said Barber “For anyone interested in establishing a permanent legacy in this community, this is the opportunity of a lifetime to make the gift of a lifetime.”

Through philanthropic services, strategic grantmaking and community leadership, The Luzerne Foundation helps people support the causes they care about, now and for generations to come.

Gift of a Lifetime: Shopping for Charity

Having more retirement money than you need is a great problem to have, and one that’s now easier to solve. But generous IRA donors still face multiple options for their gifts: Support the entire community? Underwrite a special cause? Shore up a favorite charity? Here are three top charitable fund picks of Charles M. Barber, The Luzerne Foundation President & CEO

The Fund for Luzerne County…Meeting ever-changing community needs.

IRA transfers to the Fund for Luzerne County address a broad range of current and future needs. The Luzerne Foundation evaluates all aspects of community well-being—arts and culture, community development, education, environment, health and human services—and awards strategic grants to select projects and programs.

Barber: “For people who care deeply about this community and its people, this fund is an excellent way to address our most pressing needs, today and tomorrow.”

Field of Interest Fund—Connecting personal values to high-impact opportunities.

IRA transfers to Field of Interest Funds allow donors to target gifts to causes important to them: arts, AIDS services, urban education, neighborhood revitalization, youth welfare and more. The Luzerne Foundation awards grants to community organizations and programs addressing the donor’s specific interest area.

Barber: “For those who are particularly passionate about a single cause, Field of Interest Funds provide strategic, lasting support—even as needs change over time.”

Designated Fund—Helping local organizations sustain and grow.

IRA transfers to Designated Funds allow donors to support the good work of a specific nonprofit organization—a senior center, museum or any qualifying nonprofit charitable organization.

Barber: “For people who want to help secure the future of their favorite charities, our endowed Designated Funds give nonprofits a steady stream of income, plus planned giving and investment management services.”

Sources:

Charles M. Barber, The Luzerne Foundation President & CEO, 570.714.1570

Investment Company Institute, http://www.ici.org/research/stats/retirement/

The Luzerne Foundation
The Luzerne Foundation
The Luzerne Foundation helps people create funds to do good things today and lasting good for tomorrow. Here for Good!™

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