Strategy for leveraging an IRA to eliminate taxes and increase giving
“Amy” is an NCF giver who has long tried to leverage her tax situation to create more capacity to give. She and her husband, who are both over 60, are still working, have a large percentage of their wealth in IRA’s. This year they have reached a place where they can begin to free some of this up for their giving.
When they heard about the charitable provisions of the CARES Act, they were excited to see if they could manage their Taxable Income to $0.
They have decided to make a $150k distribution from their IRAs to their investment account which will increase their AGI to just over $300k. They then plan to add that to some cash already available in their investment accounts to make a $300k gift to NCF. They will put 60% or $180k of this in their NCF Giving Fund, and the rest will go to a NCF Single Charity Fund for an organization they want to make a significant, five-year commitment too.
The result, when combined with other deductions, is $0 Taxable Income and $0 Tax, and significantly more capacity to support the organizations they love.