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Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3153
Experience:  EA, CEBS - 35 years experience providing financial advice
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I have a substancial IRA account what is the proceedure in giving this fund to a church wi

Customer Question

I have a substancial IRA account what is the proceedure in giving this fund to a church with no taxes paid by either parter
Submitted: 6 years ago.
Category: Tax
Expert:  Bill replied 6 years ago.
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Bill :

You can take a withdrawal and then give it to the charity but you will have to report the IRA distribution on your tax return as taxable income. You could then claim the contribution as an itemized deduction on Schedule A (assuming you can benefit from itemizing). The deductible amount will be limited to 50% of your adjusted gross income for the year but you can carry over (for up to 5 years) any unused amounts and deduct them (still subject to the 50% limitation) in those future years. Last year if you were over age 70 1/2 you could have IRA distributions sent directly to charities and not claim the distributions as taxable income (up to $100,000) but that exception expired 12/31/09. However, there is proposed legislation to extend the exception to this year but it has not been signed into law yet.

Bill :

Another alternative is to list the church as the beneficiary of your IRA and upon your death the funds will be distributed from your IRA to the church tax-free.

Customer :

If the church is designated as beneficiary of my IRA is that amount also limited to $ 100,000

Bill and 2 other Tax Specialists are ready to help you
Expert:  Bill replied 6 years ago.
No, there is no limit on the size of your IRA when designating the church as beneficiary of your IRA. The $100,000 limit only applied (and will apply this year if enacted into law) to distributions that are made while an IRA owner is alive. Because the church is a tax-exempt entity, any amount the church receives is tax-free.