How Savings and Retirement Benefit Distributions May Prudently Be Used to Make Charitable Gifts
53 No. 1 NYSBA TR. & EST. L. SEC. J. 7 (Spring/Summer 2019).
7 Pages Posted: 7 Nov 2019
Date Written: 2019
Individuals often fund charitable gifts with their savings or retirement benefits. Such benefits, other than those from a Roth individual retirement account or annuity, are generally included in the individual’s gross income when received. However, individuals may not be able to deduct for federal income-tax purposes any of the charitable contributions they make during the period 2018 to 2025 because the 2017 tax act substantially limited the deductibility of state and local taxes, eliminated miscellaneous itemized deductions, and dramatically increased the applicable standard deductions. On the other hand, distributions from individual retirement accounts or annuities may be eligible for the favorable tax treatment applicable to qualified charitable distributions (QCDs). This article explains the QCD requirements. The article also discusses when it is prudent to use those provisions and when it is prudent to do otherwise if savings or retirement benefits fund charitable contributions, and when it is prudent to use other funding sources, such as appreciated publicly traded securities, for charitable contributions.
Note: Reprinted with permission from the New York State Bar Association, One Elk Street, Albany, NY 12207.
Keywords: Charitable Contributions, Gifts, Tax Deductions, Retirement Plans, Pension Plans, Saving Plans, Employee Benefits
JEL Classification: J32, K19, K34, K39
Suggested Citation: Suggested Citation