In the Community
Turn Your IRA into a Gift for GoodFebruary 01, 2016
Transfer up to $100,000 from your individual retirement account to charity annually—tax-free. Renewed legislation allows you to give more to charity and pay less in taxes!
Community Foundation donors recently received great news. On December 18, 2015, Congress passed the PATH Act, making permanent the opportunity to give individual retirement account (IRA) assets to charity, free from federal tax.
This means that our donors can make their charitable dollars go farther!
Here is what is important for you to know.
- Individuals 70 ½ years of age and older can transfer up to $100,000 of IRA assets directly to a charity—like Community Foundation of the Lowcountry—without the money being included as income for tax purposes. Each spouse has this option, making a married couple’s opportunity up to $200,000. This preserves the full amount for charity, and allows donors to do this during their lifetimes, rather than waiting to give through estate plans.
- Some donors and their heirs will benefit from reallocating their estates with these gifts. For example, any amounts left in an IRA when an individual dies may be taxed as income to the beneficiary and are also considered assets for the purpose of calculating that person’s estate tax liability. When you give your IRA to charity, your heirs are not burdened by the taxes associated with receiving your IRA upon your death. Instead, you can leave them other assets that have a more favorable tax treatment.
- The Community Foundation can help you to achieve your personal charitable goals as well as your financial goals. These IRA gifts can be added to an existing fund or used to start a new fund (of any type except donor advised) and can also be permanently endowed, providing a lasting legacy. Just imagine: You can fund a scholarship, provide financial stability to several of your favorite nonprofits or support the entire community through the establishment of an unrestricted fund that can support critical needs.
This provision really can make a significant difference to senior citizens and their communities. Think about it: Americans have saved billions of pre-tax dollars in IRAs. Thanks to their continued savings and investment returns, an estimated $5.3 trillion is currently invested in IRAs. Those who don’t need this saved asset can truly make a meaningful difference—no matter what their area of charitable interest might be. Arts, education, environment, poverty, health—consider these and other causes. And if you need suggestions, we can provide those, too.
Community Foundation of the Lowcountry knows the community and its needs, and cares deeply about our local friends and neighbors—our beautiful part of the world.
A few examples of needs you might consider:
- Touch Tomorrow for the Lowcountry Fund: provides needed dollars for the Community Foundation to make grants supporting nonprofit organizations in our four-county service area (Beaufort, Jasper, Hampton, Colleton).
- Project SAFE Fund: provides funding for low-income residents to hook up to sewer on Hilton Head Island. Failed or failing septic systems are causing serious public health issues, environmental pollution, and loss of economic development opportunities. We are in need of $3 million to solve this problem once and for all. Will you help?
- Public Art Fund: The amazing exhibition we bring to the area every other year, and the subsequent purchase, donation (to the Town of Hilton Head Island) and placement of large-scale pieces of art doesn’t happen by accident, and requires financial support. You could help to keep this collection growing.
- Strengthening Nonprofits Fund: supports the training and counseling we do with Lowcountry nonprofit executives and their boards, making them more efficient and effective. It also means that our own grant investments in these organizations may have more impact.
If an IRA gift could be of financial/tax benefit to you, I can assure you that it can be of charitable benefit to others as well. And we can make the process simple. In this case, even Uncle Sam did his part to make it easier for us all to live generously.
Denise K. Spencer
President and CEO