Giving Through an IRA

Floyd Litz is a fitness enthusiast, devotee of the mission of Presbyterian Senior Living, a generous donor – and a prudent fiscal manager.  He pays careful attention to his funds to maximize their benefit to charity and at the same time meet his current and future needs.

When the time came to begin fulfilling his generous pledge to support the new Fitness and Aquatic Center at Kirkland Village in Bethlehem, Floyd researched various giving options.  He wanted the organization to have immediate access to funds to complete the capital project, so a deferred gift was out.  He preferred not to make an outright gift from current assets, wanting to preserve what he calls his ‘seed money’ for future uses.

For Floyd, making a gift by distribution from his IRA – the new giving option provided by the federal Pension Protection Act of 2006 – was the perfect choice.  But since this was a brand-new giving opportunity, both for Floyd and his financial advisor, Floyd met with Rachel Osborn, Regional Director of Mission Support.  She provided him with the information and documents to share with his advisor to make this truly a “turn-key” gift.”

How does the Pension Protection Act work?

If you are 70 ½ or older, you may make a gift to a qualified charity using funds transferred directly from your IRA – without paying taxes on your distributions.  The transfer generates neither taxable income nor a tax deduction.  Prior to this legislation being enacted, if you wanted to use IRA funds for a charitable contribution, you had to withdraw the money from your IRA and then contribute it.  The amount you withdrew was taxable and the deduction for the contribution may or may not have offset the tax.

Other important benefits of the IRA rollover provision are that charitable distributions count toward minimum required distributions, and you may transfer up to $100,000 per year directly from your IRA.  The legislation currently expires on December 31, 2010, but permanent legislation is under consideration.  Please contact us to take advantage of this opportunity.

Making charitable contributions from an IRA will be especially appropriate for you if:

• You are age 70 ½ or older
• You do not itemize deductions
• You are required to take distributions but do not need them for living expenses
• You live in a state that doesn’t allow charitable deductions
• You may lose some of your itemized deductions because of your income level, or
• You are not able to deduct all of your charitable contributions because of deduction limitations.

Here is an example.  Suppose you want to contribute $10,000 to a Presbyterian Senior Living community, you have $700,000 in an IRA and will be required to withdrawal approximately $35,000 before the end of the year.  You can authorize the trustee of your IRA to transfer $10,000 to the community and $25,000 to you.  The $10,000 transfer will count toward your mandatory withdrawal of $35,000 and will not be subject to tax.

Some limitations apply to these non-taxable charitable distributions from an IRA:

• The maximum amount that can be rolled over annually is $100,000.
• Distributions must be made to a qualified non-profit institution such as Presbyterian Senior Living, Inc., Presbyterian Homes, Inc. or one of our communities.  They cannot be made to a private foundation, supporting organizations or a donor advised fund.
• Gifts must be outright; they cannot be used to establish a gift annuity or to fund a charitable remainder trust.

As Floyd Litz can attest, taking advantage of this opportunity is simple!  For more information and the necessary forms, please contact Presbyterian Senior Living Mission Support at 800-382-1385.