How To Attract Major Gifts

An IRA is one of the worst assets to leave to your heirs. Here’s an alternative that can save tax on your IRA and benefit your church.

Meet Bill and Ann. Bill is retired and has an IRA worth $1,000,000–not unusual in today’s mega-IRA world. They both have other assets: Ann’s 401(k) from her career, their home, other investments and the proceeds from the sale of Bill’s business.

Bill has named Ann the beneficiary of his IRA. When he dies, Ann will re-name the IRA in her name, continue to draw income for the balance of her life and then leave it to their three children.

A “typical” plan. Exactly what most people do.

But it’s a tax disaster.

Take a look at the “before and after” results (just with respect to Bill’s $1,000,000 IRA) in the chart below. Plan A is Bill and Ann’s current plan. Plan B shows the results of a technique I teach in The Smart Giver.

Which looks like a better plan to you?

Most people are what I call “flying blind.” They don’t even know there is a Plan B.

Your church probably has a number of “Bill and Anns.” Knowing about Plan B can endow your church in just a couple of transactions.

The Treasury Department estimates there are currently 3 trillion dollars in IRAs. Right behind this are 60+ million Baby Boomers (the oldest turning 63 this year) who hold 12 trillion dollars in qualified plans such as 401(k) plans.

Will your church get its fair share? Could you help people within your congregation divert money that otherwise would go to the government to their heirs and your church?

For more information about this plan, see the video entitled, “How To Leave 100% Of Your Estate To Your Children Tax Free” on my video podcast site.

This concept is also the subject of one of the 24 lessons in The Smart Giver, an educational series designed to help people increase their income, reduce taxes and help their church all at the same time.

How To Make Tax Free Transfers From Your IRA

Want to potentially lower your taxes and help your church financially? Then acquaint yourself with the IRA Charitable Rollover. Currently, this piece of legislation has a time limit and is due to expire at the end of 2009.

The IRA Charitable Rollover was originally a part of the Pension Protection Act of 2006. It expired 12/31/2007. It was “extended” effective October 3, 2008 and expires again 12/31/09.

It allows persons 70 1/2 and older who have an IRA to transfer up to $100,000 tax-free to the qualified charities of their choice. The operative words are “tax free.”

Transferring an amount equal to or greater than the Required Minimum Distribution from an IRA can lower taxes as an IRA Charitable Rollover satisfies the RMD requirement but is not taxed.

RMDs have been suspended for 2009, but there is a push on to make the IRA Charitable Rollover permanent.

In addition, planned giving professionals and legislators are seeking to extend the tax-free transfers to charitable remainder unitrusts, charitable remainder annuity trusts, pooled income funds and charitable gift annuities.

If you don’t itemize, the IRA Charitable Rollover can enable a gift without any tax consequences. For non-itemizers, charitable gifts are otherwise non-deductible.

Using the IRA Charitable Rollover can possibly lower or eliminate the tax on Social Security retirement benefits.

If you are a generous donor, it can allow you to exceed the 50% of adjusted gross income limitation for cash contributions.

Bottom line: If you do not familiarize yourself with the IRA Charitable Rollover, you may be leaving money on the table.

If you represent a church and do not fully communicate the benefits of the IRA Charitable Rollover to your congregation, you are passing up an opportunity to put a six-figure number in your bank account or endowment fund.

For more information, see the video entitled, “How To Make A Tax-Free Transfer From Your IRA” at http://thesmartgiver.com/podcast/