Tax Benefits

Legislation making the $100,000 charitable IRA contribution permanent allows taxpayers to take full advantage of the numerous tax benefits of these contributions.

Sec. 408(d)(8) permits “qualifying charitable distributions” from traditional IRA or Roth IRA accounts to be excluded from gross income. The provision first appeared in the Pension Protection Act, P.L. 109-280, in August 2006, as a temporary measure. In the intervening years it lapsed and was revived several times. The Protecting Americans From Tax Hikes (PATH) Act of 2015, P.L. 114-113, made it permanent. It is a powerful incentive to charitable giving, and through the use of life insurance, the ultimate amount the charity receives can be substantially increased. (http://www.thetaxadviser.com/newsletters/2016/apr/charitable-ira-distributions.html)

What is a “qualifying charitable distribution”?

The requirements are relatively simple.

The charitable distribution must be:
  • From a traditional IRA or a Roth IRA;
  • Direct from the IRA trustee to the charitable organization—with no intervening possession or ownership by the IRA owner;
  • On or after the IRA owner has reached age 70½; and
  • A contribution to an organization that would qualify as a charitable organization under Sec. 170(b(1)(a), other than a private foundation or donor advised fund.

See more at http://www.thetaxadviser.com/newsletters/2016/apr/charitable-ira-distributions.html#sthash.yrR5gYqo.dpuf.