Required Minimum Distributions
The
IRS requires that you withdraw a certain amount each year from your qualified account
such as a 401k or IRA and include it in your taxable income. The Secure Act of
2019 changed the age for required minimum distributions (RMD) to 72. If you
turned 70 ½ in 2019, you still would need to withdraw your required minimum
distributions. If you turn 70 ½ in 2020, you will not have to take your RMD
until you turn 72. Whenever you must take your RMD, there is still a way to
make a tax advantaged donation to a qualified charity, like Grace Church, even
if you no longer can itemize deductions. By utilizing a portion of your IRA required
minimum distribution (RMD), you can donate directly to the church and avoid the
income tax. For example:
Let’s
say your RMD for this year is $7,000. If you take the RMD directly, your
taxed on it as if it were ordinary income. If you’re in the 20% tax
bracket, this would cause you to pay an additional $1,400 in taxes.
For
every $1,000 of your RMD that you donate directly to Grace United, you reduce
your tax bill by $200!
There are few rules to follow to
make sure it’s done properly, but it’s not very complicated. Since many
people won’t be able to deduct their charitable donations in 2019 and beyond,
this provides an excellent way to save on your taxes and to help our church!
If you have questions, call your accountant,
financial advisor or
Rich Bevilacqua, Stewardship Chair.
Donor Advised Funds
Many brokerage
firms (including Schwab, Fidelity and Vanguard) can set up a Charitable Donor
Advised Fund for you. When you move assets like stocks, bonds or cash to this
fund you get a tax deduction immediately, but you don’t have to decide
immediately where to donate. Once you decide what charities you want to support
(and this could be in a tax year after you establish the fund) you simply give
instructions to disburse your gifts from it to the charities you support. Contact Rich Bevilacqua if you have any questions.
Beneficary Designations
Not everyone wants to commit to making a gift in their will or
estate. Some prefer the increased flexibility that a beneficiary designation
provides by using IRAs and retirement
plans, Life insurance policies, or Commercial annuities. It
only takes three simple steps to make this type of gift. Here's how to
name Grace UMC as a beneficiary:
1. Contact your retirement
plan administrator, insurance company, bank or financial institution for a
change-of-beneficiary form.
2. Decide what percentage
(1 to 100) you would like us to receive and name us, along with the percentage
you choose, on the beneficiary form.
3. Return the completed
form to your plan administrator, insurance company, bank or financial
institution.
If you name Grace UMC in
your plans, please use our legal name, address and federal tax ID number. Grace United Methodist Church, 8 Carrera
Street, St. Augustine, FL 32084. Federal Tax Number: # 59-3532125.
Talk to your financial or
legal advisor to learn which assets will or will not trigger taxable income
when paid to a beneficiary.
