Giving From Your IRA: The Same Gift, a Better Result

Same $10,000 out of your account. About $2,200 more in the hands of the organization you wanted to support. (Figures are federal and illustrative. Your bracket and your state treatment are worth confirming with your CPA.)

There is a second benefit that is easy to overlook. Because the gift keeps your reported income lower, it can also reduce how much of your Social Security benefit is taxed and help you stay under the thresholds that trigger higher Medicare premiums. For some households, that is worth as much as the tax savings itself.

The ground rules

This is called a Qualified Charitable Distribution. It is straightforward, but the details are not

flexible:

• You must be 70½ or older on the date of the gift.
• The money has to go straight from your IRA to the charity. Withdrawing it yourself and then writing a check does not qualify, so have your advisor handle the transfer.  
• You can give up to $111,000 per person this year. Spouses with their own IRAs can each do it.
• The recipient must be a qualified charity. Donor-advised funds and private foundations do not count.
• You cannot receive anything of value in return, so gala tickets and auction purchases fall outside the rules.

Looking further out

Planned giving simply means deciding now how a gift will be made later. Three approaches fit Valley families particularly well:

Name a charity as your IRA beneficiary. Among the most efficient gifts available, because a nonprofit receives those dollars free of income tax while your children would owe tax on every one of them.

Leave a bequest in your will or trust. Your assets stay fully available to you for as long as you need them.

Give appreciated stock or land. For families whose wealth sits in a ranch or in shares held for decades, this avoids the capital gains tax a sale would trigger. Conservation options are worth exploring alongside it.

If you are thinking about this year

Call your advisor in the fall rather than late December, since the transfer takes time and must be completed by year-end. Let the organization know the gift is coming, because the check often arrives without a donor's name attached. Keep the acknowledgment letter. Then confirm the details with your CPA.

If your advisor has never raised this with you, it is worth asking why. At SYV Wealth Advisors, charitable planning and tax strategy are not separate services or an annual add-on. They are part of every relationship we have, because how a gift is structured often matters nearly as much as the decision to give.

The causes that hold this Valley together, its open land, its food pantries, its clinics, its schools and its arts, are sustained by neighbors who plan ahead. A small amount of structure makes those gifts go a good deal further.