Retirement Plan Assets
Assets in qualified (tax-deferred) retirement plans may represent a large portion of your total assets and therefore may be an important factor in planning testamentary charitable gifts. Retirement assets generally considered suitable for charitable gifts include such plans as IRAs, Keoghs, SEPs, 401(k)s, 403(b)s, and ESOPs.
Left to family members or friends, these assets are subject to income tax and may also be subject to estate tax and generation skipping transfer tax. Because of this potential double layer of tax, retirement plan assets may be particularly attractive as an asset to leave to RedLine. In other words, if you designate RedLine as a beneficiary upon your death of all or a specified percentage of a retirement plan, the portion of the plan payable to RedLine will generally escape estate taxes, and RedLine, as a tax-exempt institution, will not be required to pay income tax on the distributions. As a general rule, if you intend to make both noncharitable and charitable gifts at death, it makes sense to consider using your tax-deferred retirement plan assets for charity and other assets for heirs.
Life Insurance Policies
Naming the RedLine the beneficiary of an existing life insurance policy that is no longer needed to provide for dependents offers a simple way to support this institution. Since you are the policy owner, the value of the policy will be included in your estate, but an offsetting estate-tax charitable deduction will generally be allowed. You may also be able to assign an existing whole life policy to RedLine, irrevocably making us the owner and beneficiary, and claim an income-tax charitable deduction for the lesser of either your basis in the policy or its fair market value in that year. If the policy is not paid up and additional premium payments are due, you may donate cash or the equivalent to RedLine to pay the premiums each year and claim a full tax deduction for the gift. Lastly, you may be able to purchase a new policy naming RedLine as owner and beneficiary, pay the annual premiums (through us), and claim the premium amount as a charitable contribution.
Gifts From your IRA
On Friday, December 18, 2015, Congress passed the IRA charitable rollover provision of the Trade Facilitation and Trade Enforcement Act of 2015, of which a part was the IRA charitable rollover provision.
Under this legislation, qualified donors may make outright gifts of up to $100,000 per year to RedLine from their IRA and avoid taxation on the distribution. These charitable distributions also help satisfy the donor's required minimum distribution (RMD) for the year.
To benefit from this gift opportunity, the following qualifications must be met:
Donor must be age 70 ½ or older at the time of transfer.
The maximum amount a donor may transfer is $100,000.
The gift must be outright. Gifts to donor advised funds or to life income vehicles do not qualify.
The gift must be transferred directly from the IRA account by the IRA administrator to RedLine. Donors with check-writing ability for their IRAs may use this feature to complete their gift.
Contact Us
For more information on how these gifts or others might work for you, please call (303) 296-4448 or email us.
RedLine
Development Office
2350 Arapahoe St
Denver, CO 80205
This website is designed to give you general information about various ways of giving to the RedLine, including some of the potential financial benefits. It is not intended to provide specific advice about the legal or tax implications of charitable giving. Before making a gift to RedLine, you should consult with your financial, tax, and legal advisors.
