Turning Taxable Income into a Tax-Free Donation

Written by Melissa K. Grudin, Board Member
Ashland Community Hospital Foundation

Melissa K. Grudin

Perhaps you’ve heard from a friend or relation who made a gift to a 501c3 nonprofit organization from their IRA Retirement Account. Perhaps you’ve heard whispers of ways to avoid stock market ups and downs by donating money to your favorite charity tax free during your lifetime! Perhaps you’ve stayed awake at night wondering how to protect your hard-earned retirement money and reduce risk!

And if you’re 70 ½, taking Annual Required Minimum Distributionand like the idea of making a gift from your IRA account to your favorite charity, now in your lifetime, read on!

Congress recently passed a  law allowing distributions from your IRA account up to $100,000 annually, to be made to charities of your choice tax free!

Let’s use Ashland Community Hospital Foundation (ACHF) as an example! Say, for 2019, you need to withdraw $10,000 Required Minimum Distribution (RMD) before year end. It’s been on your mind and you need to do it before December 31, or you’ll incur a 50% penalty. Ouch! You don’t really need the money, but you know ACHF would make good use of it. Your daughter has given birth there, you and your family have used the Emergency Room for various incidents, it’s your “go to” lab for bloodwork. You’d like to give something back to them! Perhaps, $20,000. You can withdraw that from your IRA, have a check made payable to ACHF (including their taxpayer ID: 93-0691238) from your IRA provider and send it to them. And you can choose what securities you wish to sell.  That would satisfy your RMD and help ACHF at the same time!

That gift would be tax free from you to the hospital! And you can gift up to $100,000 yearly! If you were to take your RMD and not give it to a charity, that is a taxable event. But any money given to the charity from your IRA is given tax free by you. This allows you to gift in your lifetime, as well as after you pass away. What a great way to watch your money work for you through the Foundation and avoid market pitfalls!

It’s recommended to talk to your tax advisor or estate planning attorney about this. Your team can help you stay on track with your philanthropic wishes! Contact Kathleen Mackris at (541) 482-0367 with questions on how to proceed. Click on the link below to learn more! 

As we turn the corner into the fall season, it’s important to educate yourself about existing charitable opportunities that benefit you tax wise as well as any nonprofit you support before the year is out! 

Learn more about the IRA Charitable Rollover