Unleashing IRA Potential for the Church and Its Ministries
Dr. Vincent (Vin) Walkup, President of the Nashville Area United Methodist Foundation reminds you that the Pension Protection Act of 2006, which is scheduled to expire on December 31, 2007, allows person 70½ and older to give directly from a traditional or Roth Individual Retirement Account to a church and/or charitable ministry. How can a person unleash this potential? This may be done, with consultation from the administrator of the IRA, an accountant or other professional advisor, by transferring the amount that is required to be withdrawn this year (or any other amount up to a total of $100,000) to the church, the ministry, or institution.Gifts must fully qualify for the charitable deduction and generally may not be made to a private family foundation or advised fund. Also, they cannot be used to fund a charitable remainder trust or gift annuity and still qualify for the tax-free status of the gift.
Are there any special procedures? Yes. It is important that tax-free gifts not be withdrawn by the individual, but instead be distributed directly to the church, ministry, and/or institution. We suggest that the individual check with the administrator of the IRA or other advisors for more information.
If a person directs a portion of an IRA or other retirement assets to his/her church, to ministries, or institutions related to the church, as part of an estate plan also help save taxes? Yes. Funds remaining in retirement accounts at death are considered part of an estate for federal tax purposes and could be subject to estate taxes. Unlike most other assets left to heirs, retirement funds that remain after estate taxes will also be subject to income taxes. Many well-advised people will choose to avoid this “double-taxation” by funding charitable gifts with such funds. Once again, your Foundation recommends that you check with your financial advisors to see the best ways in which you can maximize your estate giving and minimize the taxes your estate and heirs will pay.
The purpose of sharing this is to provide general gift, estate and financial planning information. This is not intended to provide legal, accounting, or other professional advice. You may contact Vin Walkup at the Nashville Area United Methodist Foundation, 304 S. Perimeter Park Dr., Suite 3, Nashville, Tennessee, 37211, (615)259-2008, or by email at vwalkup@nashaumf.org. He continues to be available for stewardship programs, general gift-planning seminars and to work with individuals and their advisors to discern ways to extend the love of Christ across time.
