IRA gift to church

[Gretel]

Is it true that if an individual (50) gifts her IRA account to a church that the IRA funds escape taxation (penalty and tax)?

[luke]

Maybe

t/p has to 70 1/2 and distribution has to be directly from trustee to church...
ttb 4-18

[solomon]

Is it true that if an individual (50) gifts her IRA account to a church that the IRA funds escape taxation (penalty and tax)?

Yes, that was extended but it is supposed to be a direct transfer to the church from the custodian. Just noticed (50). Has to be for the RMD or more so not old enough.

Here is Code - §408(d)(8)

(B) Qualified charitable distribution

For purposes of this paragraph, the term “qualified charitable distribution” means any distribution from an individual retirement plan (other than a plan described in subsection (k) or (p))—

(i) which is made directly by the trustee to an organization described in section 170 (b)(1)(A) (other than any organization described in section 509 (a)(3) or any fund or account described in section 4966 (d)(2)), and

(ii) which is made on or after the date that the individual for whose benefit the plan is maintained has attained age 701/2.

[Gretel]

Well, I am not talking about using IRA funds to make a donation. I am talking about transferring the IRA account to the church, just like transferring a house to a church.

[DonPriebe]

Well, I am not talking about using IRA funds to make a donation. I am talking about transferring the IRA account to the church, just like transferring a house to a church.

I wouldn't think that that was even possible. A church may own a house, or a stock, or assets that once were in an IRA, but cannot own an IRA per se.

[Lion]

No

You can't transfer an IRA at all. You can move stuff around inside of it, you can take stuff out, and when you die, your beneficiaries will get it renamed as a beneficiary account to them. But, it's funds held in trust for YOUR retirement. If no longer in trust for YOU and you're not dead, a reportable event has happened to you. (Your death would probably be a reportable event, also, but that's not what you're asking.)

She can take a distribution and donate to her church. She can name the church as her beneficiary.

[Gretel]

Thanks. That makes a lot of sense but still too bad.

[Burke]

She can always liquidate the account and make a charitable contribution. The income and deduction would offset each other, presumably, depending on whether she itemizes. But at her age, there would still be a 10% penalty. If she makes the church the bene, then they would get it sooner or later, but not until she died, which might accomplish what she is trying to do. After 59 1/2, no problem to liquidate.

[Gretel]

Ok, thanks to all.

Since there is no law to accommodate a tax free transfer of an IRA to a Charity at young living times, I would like to change this. Who do I write to?

[DonPriebe]

Ok, thanks to all.

Since there is no law to accommodate a tax free transfer of an IRA to a Charity at young living times, I would like to change this. Who do I write to?

You might consider that for the first eleven and one-half months of 2010, there was no law at all about the special benefits of transferring money from an IRA to a charity. The law had expired on December 31, 2009. On December 17 2010 it was retroactively reestablished for all of 2010, but expires again at the end of this year (2011).

[Burke]

Ok, thanks to all.

Since there is no law to accommodate a tax free transfer of an IRA to a Charity at young living times, I would like to change this. Who do I write to?

Since this is a tax law passed by the US Congress, you should contact your state senator and/or district congressional represenative (or both), plus chairman of House Ways and Means Committee for good measure. All names and addresses would be available on-line.

[Gretel]

Thanks. I already have a list of people in my head who I will ask to sign a similar letter.