The New Tax Law and IRA Charitable Rollovers

As we begin the new year, we thought you would like some timely information about an important provision of the new tax law and IRA distributions that may benefit you with income tax savings.

If you are at least age 70½, you can reduce or avoid paying income tax on your required IRA distribution when you redirect all or a portion of it to a 501(c)(3) charity.

But you will need to act by January 31 for it to apply to your 2012 taxes.

Here’s how it works:

• Ask your IRA custodian to write and send your distribution check directly to your favorite charity (we hope that’s Hospice Foundation). 
• According to the IRS rules, you are allowed up to $100,000 directly from your IRA and you will avoid paying any income taxes on this “qualified charitable distribution.”  (Keep in mind that since you are redirecting your IRA distribution to your charity, it will not count as income to you.  Therefore, you will not receive an additional charitable income-tax deduction later.)  
• Your IRA distribution redirect must be made by January 31, 2013 for it to apply against your 2012 taxes.

If you have already received your 2012 required minimum distribution, you are still allowed to transfer these funds to your the 501(c)(3) charity of your choice by January 31.  You will not have to report it as income for 2012. 

 

Similarly, you may also redirect your 2013 distribution at any time during the year and into January 2014, and avoid reporting the required distribution as income for 2013.

 

If you consider taking advantage of this provision in the new tax law, we hope you will consider Hospice Foundation as the charity of your choice and continue your support of compassionate, end-of-life care in your community.

 

Please call Lisa Bennett at Hospice Foundation 831-333-9017 for more information.

Thank you very much for your support and Happy New Year!

Philanthropy: Cornerstone to a Meaningful Life

By Lisa Bennett

I just learned something troubling:

A study in January this year by U.S. Trust revealed that only 36 percent of the wealthy and very wealthy consider "making a positive impact on society" an important use of their wealth. And only 13 percent consider it important to "leave a legacy of contribution to society."

A 2007 Bank of America study said 98 percent of high-net-worth households give to charity, and most of them give to multiple organizations.

If so many wealthy people are giving to charity, why isn't using their wealth "to make a positive impact on society" a higher priority for them?

I was surprised to learn that the top three priorites cited in the US Trust study were "financial security," "financial freedom" and "travel." Maybe these donors are not giving enough thought behind their philanthropy. Maybe their gifts are at a dollar level not "meaningful" to them.

Philanthropy can be a cornerstone of building a meaningful life by using one's wealth to help create lasting, positive change.

Ask yourself, "When people speak my name after I'm gone, what would I like them to say?"

How would you like to be remembered?

Thoughtful, meaningful philanthropy is one way to seek and find the answer to these questions. Philanthropy that goes beyond the merely transactional and soars into the transformational will help us all - the donors no less than the recipients.

Think about it.