Home > Making a charitable gift can help you take advantage of new Roth IRA conversion rules
Making a charitable gift can help you take advantage of new Roth IRA conversion rules
With new tax provisions taking effect in 2010 you may be eligible to convert a traditional IRA (Individual Retirement Account) or qualified plan to a Roth IRA regardless of your income level. In addition, conversion taxes can be paid entirely in 2010, or deferred and divided equally between 2011 and 2012 tax years.
This is great news for higher-income individuals and couples who until now have been unable to convert an existing IRA or employer-qualified plan to a Roth. Also effective in 2010, a conversion to a Roth IRA is allowed regardless of filing status. Previously, married taxpayers who file separately were not allowed to make a Roth IRA conversion.
However, since a Roth IRA conversion involves moving assets from a pre-tax IRA or qualified plan, the amount converted is subject to ordinary income tax. One way to help offset this tax burden is the establishment of a Charitable Gift Annuity (CGA) or Charitable Remainder Trust (CRT) through the Oklahoma City Community Foundation. By establishing a CGA or CRT, you can make a gift to the charitable organization of your choice and receive a charitable income tax deduction for the current year while also earning a guaranteed income for life, offsetting the conversion taxes.
Additionally, as the financial markets continue to recover you may have securities you purchased more than a year ago that have increased in value. These appreciated securities would make ideal assets to use in the establishment of a CGA or CRT as they offer multiple tax advantages.
For more information on how the Oklahoma City Community Foundation can help you offset the taxes of a Roth IRA conversion, while also making a charitable gift back to your community, contact Joe Carter at (405) 606-2914.
