As of 2016 anybody 70.5 years or older has a new option for making gifts to the Lord’s work at church, a local WELS-affiliated ministry, and/or a WELS area of ministry: your IRA!
Typically IRA distributions are taxable and, by increasing your taxable income, they may reduce certain tax deductions and personal exemptions you might claim and may increase the tax on your Social Security income or even increase your Medicare premium. But, at the turn of the year, Congress made permanent the opportunity known as the IRA charitable rollover where direct transfers from an IRA to charity are free from federal and potentially state income tax. If you generally do not itemize your deductions, a direct transfer to a WELS ministry may be especially appealing because you will still receive tax benefits for your generosity. If you do not need the required minimum distributions that you receive from your IRA, consider directing those to WELS to save on taxes, then use the cash you would have given to charity for other needs.
Under the new law you and your spouse, assuming he or she is 70.5 years or older and also has an IRA, may each make direct transfers of up to $100,000 per year to charity. Direct transfers to charity are wholly excluded from your taxable income, so they do not have any adverse effect on other tax benefits you might enjoy. These transfers do not generate a charitable deduction, but the relief from tax impact is often more advantageous. Consult your tax or financial advisor to determine the most appropriate gift assets for your situation.
How do I make a direct transfer of IRA assets?
You will need to contact the investment firm that handles your IRA to request a direct transfer to a particular WELS ministry. To ensure that your IRA transfer is not taxable, the check must be made payable to the charity, not to you personally.
You can give to multiple WELS designations by directing your transfer to WELS Foundation. They will distribute funds to the ministries per your instructions. WELS Foundation then provides you with the appropriate acknowledgement for this type of gift.
If interested, talk to your financial planners and your WELS Christian giving counselor to learn more.