Remembering Deermeadows: Legacy Giving Part 2

June 6, 2019

BY:  Ned Hamil, Chairman Deermeadows Baptist Permanent Endowment Fund Committee

Part 2

This is Part 2 in a 4-part series presenting ideas you may want to consider in leaving a charitable gift to the Deermeadows Baptist Church Permanent Endowment Fund.

Contribute Your Minimum Required Distribution, or a portion thereof, to the Deermeadows Endowment Fund.

If you have been fortunate during your working career you may have accumulated a sizable sum in your IRA Account. The contributions and accumulations in the IRA have been permitted on a tax deferred (not tax free) basis. The tax laws prescribe a specific amount that may be contributed to IRAs on an annual basis. The great feature is that the contributions along with their earnings were not subjected to current income tax. These are great plans, however, Uncle Sam re-enters the picture when you attain age 70 ½. Then you must start to take money out of the account so that it may be taxed at ordinary tax rates over your remaining life. The amount you must take out each year is calculated according to an actuarial table that assumes the remaining years of your life and sets up a plan that requires taking a set amount of money out annually that presumes all those funds will be taxed before your death. The amount you take on an annual basis is known as the Minimum Required Distribution (MRD). It may be noted that individual may begin taking distributions as early as age 59 ½ without penalty but must begin no later than 70 ½.

Taxpayers over 70 ½ years of age are required to take a Minimum Required Distribution (MRD) each year whether they need the money or not to meet their financial needs. On some occasions these required distributions push the taxpayer into a higher tax bracket. If unneeded for living expenses the MRD may be directed to a qualified charitable entity (like the Deermeadows Endowment Fund) without becoming a taxable event. If your MRD is larger than you wish to contribute to a charity or charities in a given year talk to your investment professional about creating a Charitable Giving Account. (We will discuss Charitable Giving Accounts in a later edition.)

See your tax, legal or investment professional for advice to see if this is a good alternative for you.

Disclaimer: This information is not to be considered as financial or investment advice. One should contact their CPA, Financial Advisor or attorney to determine if any of the techniques are appropriate for your individual situation. You may feel free to contact a member of the Deermeadows Endowment Committee for general information about the topics discussed.

CATEGORIES: Legacy Giving