Using Your IRA to Help Your Brothers

By December 17, 2014June 3rd, 2021News, Uncategorized

Like so many others, we have anxiously been waiting and watching the US Congress for the last month. As a charitable organization, we are particularly interested in the IRA charitable rollover provision. Late last night, December 16, Congress voted to extend the provision. This provision allows owners of individual retirement accounts, who are 70 1/2 and older, to contribute up to $100,000 of their IRA assets directly to public charities, like the Educational Trust. While there is no charitable deduction for the gift, the gift will not count as ordinary income for the owner. The contribution of IRA assets to a non-profit can also count toward the owner’s required annual withdrawal.

This benefit is only good through December 31 – 14 days from now!

Why is gifting from your IRA better than taking the income from your IRA and writing a check to charity?

Take the example of a $10,000 gift. Someone who doesn’t itemize deductions normally would receive no tax break for the gift. But the qualified charitable distribution would allow the taxpayer to exclude the $10,000 from income. Assuming one is in the 25% tax bracket, that would save $2,500.

Someone who itemizes wouldn’t get a deduction, but the $10,000 charitable contribution wouldn’t boost taxable income. That could help keep adjusted gross income below the thresholds at which one loses some deductions and other tax benefits. For example, individuals with more than $200,000 of adjusted gross income (AGI) and couples with more than $250,000 are subject to the new 3.8% tax on net investment income. Individuals with AGI above $250,000 and couples above $300,000 now start losing personal exemptions and itemized deductions. As income rises, one also can lose deductions for medical expenses, casualty losses and miscellaneous itemized deductions.

The provision may also help taxpayers avoid or reduce taxes on Social Security benefits and avoid higher Medicare Parts B and D premiums, which kick in when adjusted gross income exceeds certain thresholds.

To take advantage of this legislation and to help Chi Phi Brothers, contact Director of Development, John Fisher at 404.231.1824 or