Uncle Sam Extends Special Invitation through End of 2007, Helps Seniors Make the Most of their Charitable Donations
While charitable giving is on the rise and many are feeling philanthropic, Rusty Cagle, CFP®, a Greenville-based Certified Financial Planner™ professional and president of ASE Wealth Advisors, says there are other - sometimes smarter - ways to make charitable contributions than giving straight from your wallet.
Greenville, SC (PRWEB) July 17, 2007 -- In 2005, Americans contributed more than $260 billion to charitable organizations, an increase of 6.1 percent over 2004 levels (source: Giving USA). But while charitable giving is on the rise and many are feeling philanthropic, Rusty Cagle, CFP®, a Greenville-based Certified Financial Planner™ professional and president of ASE Wealth Advisors, says there are other - sometimes smarter - ways to make charitable contributions than giving straight from your wallet.
"Thanks to the Pension Protection Act of 2006, investors over the age of 70 now have another option for making donations to their favorite charitable organization," Cagle says. "The Act makes it possible to gift up to $100,000 directly from your IRA to a charity and avoid taxation on the distribution. By avoiding tax on the donation and reducing the IRA account balance, the tax on the remaining balance is also reduced."
For example, let's say a 73 year-old person donates $10,000 annually to the charitable organization. Assuming that the person is in the 40 percent tax bracket and simply makes a withdrawal from the IRA and donates it to the charity of his or her choice, he or she would have had to withdraw $16,675 from the IRA in order to pay the $6,670 owed in taxes on the distribution. However, the Pension Protection Act actually allows this person to donate more, if he or she chooses - and to gift the money directly from an IRA account. This special ruling allows the donor to gift the full amount directly from their IRA account. So, the person could actually donate the $16,675 and make a bigger difference for the charity. Another option would be to donate the $10,000 and keep the $6,675 that would normally have been siphoned off in taxes in the IRA account.
"Make no mistake, meeting the IRS's definition of 'qualified charitable distribution' is not applicable to all retirement accounts," says Cagle. "Distributions from employer-sponsored accounts and Charitable Gift Annuities, among others, do not qualify for this tax benefit. A tax professional can help investors figure out if they qualify or not."
Additionally, not all charities are created equally. Cagle advises interested investors to research the organization and determine how it's coded. "Most organizations coded as 170(b)(1)(A) will qualify, while most of those coded as 509(a)(3) will not. For instance, private foundations, supporting organizations and donor advised funds do not qualify for this special tax-free treatment.
Cagle warns that those looking to save taxes while supporting their favorite charities have to act soon. The IRS closes the IRA-direct gifting window on December 31, 2007.
About Rusty Cagle and ASE Wealth Advisors
Rusty Cagle is an independent, fee-based financial planner and investment advisor specializing in strategies for preserving wealth, reducing tax burdens, and sustaining a family legacy. Before founding his own firm, ASE Wealth Advisors, Cagle's extensive background in wealth management began at American Express Financial Advisors, Inc.
Committed to a high standard of fiduciary excellence Cagle earned the CFP® mark of distinction from the CFP Board of Standards, and obtained the designation of chartered retirement planning counselor (SM) professional. Cagle is a member of the Financial Planning Association, the largest organization of professionals dedicated to championing the financial planning process.
Visit www.aseadvisors.com for more information about Mr. Cagle and his company.
Note:
When you need a professional to speak on complicated financial topics in an easy-to-understand and engaging manner, please call Rusty Cagle at ASE Wealth advisors.
Securities offered through Securities America, Inc., Member NASD/SIPC, Devery R. Cagle, CFP®, CRPC®, Registered Representative. Advisory services offered through Securities America Advisors, Inc., Devery R. Cagle, Investment Advisor Representative. ASE Wealth Advisors and Securities America are not affiliated.
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