January 17 

Lockkeepers

Valleyview, OH  44125

8:00 a.m.

Registration/

Full breakfast buffet

8:15 a.m.

Announcements/

Program to follow 

By contacting past IRA Rollover donors and those that may benefit and letting them know that this provision was part of the "Cliff" legislation. It may be a good time to see if they might be able to use this opportunity to further leverage 2012 or get a "jump start" on 2013. Please see the excerpt below from SEC. 208. Extension of Tax-Free Distributions from Individual Retirement Plans for Charitable Purposes in the American Taxpayer Relief Act of 2012.

SPECIAL RULES- For purposes of subsections (a)(6), (b)(3), and (d)(8) of section 408 of the Internal Revenue Code of 1986, at the election of the taxpayer (at such time and in such manner as prescribed by the Secretary of the Treasury)--

(A) any qualified charitable distribution made after December 31, 2012, and before February 1, 2013, shall be deemed to have been made on December 31, 2012, and

(B) any portion of a distribution from an individual retirement account to the taxpayer after November 30, 2012, and before January 1, 2013, may be treated as a qualified charitable distribution to the extent that--

(i) such portion is transferred in cash after the distribution to an organization described in section 408(d)(8)(B)(i) before February 1, 2013, and

(ii) such portion is part of a distribution that would meet the requirements of section 408(d)(8) but for the fact that the distribution was not transferred directly to an organization described in section 408(d)(8)(B)(i).

Who Could Benefit From a Charitable Rollover?

• Clients whose charitable deductions are not itemized - IRA rollovers especially benefit the nearly two-thirds of Americans who do not itemize deductions and therefore do not receive a tax benefit for their charitable contributions.
• Clients whose charitable gifts already exceed 50% - 30% limits of expected adjusted gross income for 2012 - This allows the donor to skip by these limits and give more.
• Clients whose Social Security income is taxable - By avoiding the recognition of taxable income, the donor may have less of their Social Security income subject to income tax.
• Residents of Ohio, Indiana, Michigan New Jersey, Massachusetts or West Virginia - These states provide no income tax break for charitable contributions. Consequently, they will save taxes by giving from their IRA instead of from their checking account.
• Clients with Future Estate Tax implications - The combination of estate and income taxes on IRA assets can produce an effective tax rate of up to 80%. The Charitable IRA rollover exclusion gives individuals the opportunity to remove up to $100,000 of these assets from their estate with no tax consequences. Spouses can rollover up to $100,000 as well, if qualified.

Can donors make a qualified charitable rollover to a donor advised fund?

No. The IRS has excluded Donor Advised Funds from the Charitable IRA Rollover provisions. However, a donor can make distributions from the IRA in the traditional way, recognize the distribution as income, contribute those dollars to a Donor Advised Fund and calculate the charitable deduction in the normal way. The charitable deduction tends to offset the increase in taxes resulting from the traditional distribution, subject to annual Adjusted Gross Income (AGI) limits.  

Also, they can create a Designated Fund with American Endowment Foundation. In the designated funds, the donor specifies the charity or charities up front. These cannot be changed (as is the case in donor advised funds). We will distribute grant dollars to the specified charity or charities based on a spending policy, i.e. 5% of beginning of the year's balance. The donor can tell us when the grant process will start.

You may be interested in learning how clients and their advisors have partnered with AEF to create Designated Fund solutions like:

• Scholarship Funds. Joan McGown wanted to establish a scholarship for graduates of the local public high school as a memorial to her deceased husband. Working with the School, Joan determined the criteria for applicant eligibility. The school reviews individual grant applications and identifies a student who best meets Joan's selection criteria. Each year AEF makes a distribution to the school, which, in turn, awards the scholarship to the student. The process is simple.
• Donor Designated Funds. Joe Russert wants to support a local charity that is very important to him. The amount he intends to give would be a major portion the charity's annual budget. Joe is concerned about "spoiling them" with such a large outright contribution. Also, it may disrupt their ability to raise funds from other sources. He decided to establish a designated fund in his name with AEF that will make annual distributions to the charity through successive generations.
• Anonymous Designated Funds. The Wilsons want to make a large IRA distribution to support specified favorite charities, but they don't want the charities or their neighbors to know it came from them. They decided to establish an anonymous fund with AEF that will make distributions to their designated charities over the next ten years.

To learn more about how to help your clients, please contact Laura Malone, CAP®, Director of Gift Planning, AEF at 330-655-7552