While many IRA owners depend on distributions from their IRA to provide needed cash flow for their living expenses during retirement, some do not. And, for those who have other retirement income sources, having to take a “required minimum distribution” out of their IRA every year, once they turn 70 ½, results in unneeded income on which they must pay taxes.
The Charitable IRA Rollover tax law permits a person who is 70 ½ or older to make charitable gifts in any amount up to a total of $100,000 per year from a traditional or Roth IRA directly to qualified charities. Your church and our KBC and SBC agencies and institutions are “qualified charities”.
Distributions from 401(k), 403(b) or other types of retirement accounts are not eligible.
The IRA owner is not entitled to a charitable income tax deduction for the IRA charitable distributions, but those distributions are not included in the IRA owner’s income. They are, however, recognized as required minimum distributions that will reduce (or eliminate) the amount the IRA owner must pay themselves out of their IRA that year.
Charitable IRA Rollover distributions, for those that qualify, can be used as the source of your monthly tithes and offerings giving as well as for capital campaign and other “over and above” giving to your church and other charitable causes.
Use your required, but unneeded, IRA distributions for Kingdom advancement in a tax-wise manner by directing them to your church or other Christian cause.
Laurie Valentine is COO and Trust Counsel for the Kentucky Baptist Foundation, PO Box 436389, Louisville, KY 40253; (502) 489-3533 or 1-866-489-3533 (Toll-free, Kentucky Only); KYBaptistFoundation.org.
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.