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Senior Spectrum Newspaper
May 2018
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Senior Spectrum Publications

Gifting Your IRA to Your Favorite Charity
by Gerald M. Dorn, J.D., EPLS, AEP
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Gerald Dorn
Gerald Dorn

If you have money in an Individual Retirement Account (IRA), you know you can’t take out distributions without paying taxes on the money you withdraw. For many older people with large portions of their personal wealth tied up in IRAs and other tax-advantaged retirement accounts, the tax implications of taking money out of an IRA can impede their ability to give large sums to the charity of their choice.

If you want to give money to a charity you support, taking the cash out of your IRA and paying the taxes on it could eat up a big chunk of the gift you were hoping to give. While you can take an itemized deduction for charitable contributions, the deduction has to exceed the standard deduction before it actually becomes useful for you to claim the money donated. Not only that, but charitable contributions are only deductible up to a portion of your income depending upon the type of charity you support and the type of property or assets donated. This means you could end up having to pay a lot more in taxes than you get back in deductions if you take money out of your IRA prematurely to make a gift to charity.

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Fortunately, lawmakers have addressed this problem in the past and made it possible for Americans to exercise their generous spirit, with an “IRA charitable rollover, described below. Lawmakers are also working on a way to make it possible for IRA holders to once again give money to a charity without having to pay a big bill to Uncle Sam in return for their generosity.

Gifting an IRA to Charity

To give a gift from an IRA to charity without having to pay taxes on withdrawals, a tax rule was introduced in 2006 called an IRA charitable rollover. Under this special tax rule, a person could give as much as $100,000 from their IRA directly to the charity of their choice. The money was excluded from income, so there was no penalty for making the gift.

However, the rule had some limitations, such as restricting the ability to give an IRA to charity only to people over the age of 70½ at the time the gift was made.

Furthermore, the tax exclusion applied only to standard and Roth-IRAs and not to other kinds of retirement plans. Still, it made it possible for people to contribute to causes they are passionate about. At yearend 2015, Congress finally enacted a law to make this technique permanent.

Now that the IRA charitable rollover has been permanently extended, taxpayers can more reliably incorporate this technique into their charitable gift planning. In some cases, this can lead to enhanced benefits for charity at little or no direct cost to the taxpayer’s family.


Gerald M. Dorn has been practicing estate planning law for 23 years and is the managing shareholder of the law firm. Mr. Dorn is a Certified Specialist in Estate Planning Law and an Accredited Estate Planner by the National Association of Estate Planning Councils.

The law firm of Anderson, Dorn & Rader, Ltd. is devoted exclusively to estate planning and estate and trust administration. The attorneys at Anderson, Dorn & Rader, Ltd. offer guidance and advice to clients in every area of estate planning and estate and trust administration. For more information or to attend an upcoming seminar, please contact us at (775) 823-WILL (9455) or visit us online at www.wealthcounselors.com.