December 3, 2021

Tax-Free Charitable Transfers from IRAs

Millions of Americans continue to save pre-tax dollars in their IRAs. The law allows taxpayers 70½ and older to share their wealth by giving retirement savings directly to charity—and bypassing income tax. This law is important to local charities operating as agents of philanthropy in order to continue to build community and improve social service programs that benefit people every day.


“It is a win-win – for people who would rather give to charity than pay taxes and for the nonprofit organizations they choose to support,” said Reneé Johnston, Saginaw Community Foundation president and CEO.


Thanks to decades of deliberate saving, some of today’s retirees have more money in their IRAs than they need for daily living expenses and long-term care. Charitable individuals and couples have expressed an interest in giving the funds to charity, but income tax must be paid on all withdrawals, which reduces the value of the gift. Others are concerned about designating their children as IRA beneficiaries, since that may draw unintended tax consequences.


“For larger estates, a good portion of IRA wealth goes to estate taxes and income taxes of beneficiaries,” Johnston said. “Experts estimate heirs may receive less than 50% of IRA assets that pass through estates.” A provision in the federal law extends this special option: transferring IRA assets directly to charity. By going directly to a qualified public charity such as the Saginaw Community Foundation, the money is not included in the IRA owner’s income and – most important – is not taxed, preserving the full amount for charitable purposes.


Legislation Provides for Charity

Annually, holders of traditional IRAs who are at least 70½ years old can make direct charitable transfers up to $100,000. Individuals may exclude the amount distributed directly to an eligible charity from their gross income. Saginaw Community Foundation can help donors execute the transfers and choose from several charitable fund options for their gift. Donor Advised Funds do not qualify for tax-free IRA transfers.


“This really is a powerful opportunity,” said Johnston. “For anyone interested in establishing a permanent legacy in this community, this is a chance of a lifetime to make the gift of a lifetime.”


Through philanthropic services, strategic grantmaking and community leadership, Saginaw Community Foundation helps people support the causes they care about, now and for generations to come. For questions regarding IRA Charitable Transfers, contact Saginaw Community Foundation at (989) 755-0545.



Gift of a Lifetime

Having more retirement money than you need is a great problem to have, and one that’s now easier to solve. But generous IRA donors still face multiple options for their gifts: Support the entire community? Underwrite a special cause? Shore up a favorite charity? Here are three contribution ideas available at Saginaw Community Foundation:


Lucy R. Allen Cornerstone Fund – Meeting ever-changing community needs.

IRA transfers to the Lucy R. Allen Cornerstone Fund address a broad range of current and future needs. Support directed to this fund allows Saginaw Community Foundation to award grants to local projects and initiatives; distribute hundreds of scholarships annually; operate our Youth First after school program; guide young philanthropists via FORCE, our youth advisory council; and convene groups and individuals together to reach common goals.


Johnston: “For people who care deeply about this community and its people, this fund is an excellent way to address our most pressing needs, today and tomorrow.”


Field of Interest Fund – Connecting personal values to high-impact opportunities.

IRA transfers to Field of Interest Funds allow donors to target gifts to causes important to them: arts, education, neighborhood revitalization, youth welfare and more. Saginaw Community Foundation awards grants to community organizations and programs addressing the donor’s specific interest area.


Johnston: “For those who are particularly passionate about a single cause, Field of Interest Funds provide strategic, lasting support – even as needs change over time.”


Designated Fund—Helping local organizations sustain and grow.

IRA transfers to Designated Funds allow donors to support the good work of a specific nonprofit organization – a senior center, museum or any qualifying nonprofit charitable organization.


Johnston: “For people who want to help secure the future of their favorite charities, our endowed Designated Funds give nonprofits a steady stream of income.”





Due to the complexity of tax law, this information may be subject to change. It is not a substitute for expert legal, tax or other professional counsel and we strongly encourage donors to work with their professional advisors to determine the impact of a charitable contribution from an IRA on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code. Every effort has been made to ensure accuracy of the information presented.