Tax Savings for You and for the Benefit of a Strong Jewish Community


Giving Back at Year’s End with the Charitable IRA Rollover

PROVIDENCE – As the end of the year approaches, many people take time to reflect on their charitable giving and how they might best help the organizations about which they are passionate. This is the time of the year when we often take a moment to appreciate the blessings in our lives and find small, meaningful ways to share them with others. For many of us, our charitable giving is guided by the Jewish value of tzedakah. There are a number of ways to be generous, but there is a great way to not only maximize one’s tax savings, but to also have a big impact on Jewish life in greater Rhode Island, in Israel and around the world.

If you are 70 ½ or older, it is not too late to consider a tax-savings charitable giving strategy that will expire on Tuesday, December 31, 2013. For 2013, IRA owners can exclude up to $100,000 of a qualified charitable distribution/contribution from his or her gross income. In addition, this qualified charitable distribution/contribution can satisfy the required minimum distribution rules.

If you take the required minimum distributions from your IRA annually, it may be a good idea to consider contributing those funds as a qualified charitable distribution/contribution. Under the law, qualified charitable distributions/contributions can be made to most public charities – but not to private foundations, supporting organizations, or donor advised funds. This provision is in effect for 2013 only. Unless Congress extends the provision to 2014, taxpayers will not be able to take advantage of this opportunity after December 31, 2013.

Distributions from your traditional IRA are generally taxed to you on receipt. Because the qualified charitable distribution/contribution is not subject to tax, no income tax charitable deduction is available. The IRA Charitable Rollover can work particularly well for those with 2013 adjusted gross income otherwise more than $250,000 ($200,000 for singles). This year, for the first time, these individuals will be subject to a new 3.8% surtax on net investment income. The surtax is in addition to the usual taxes on dividends, interest, and capital gains – and cannot be offset by the income tax charitable deduction. However, by making a direct distribution to a nonprofit organization from one’s IRA before December 31, 2013, you will reduce your adjusted gross income and – because of the way the surtax is calculated – will generally also reduce the amount of your net investment income otherwise taxed at 3.8%. It is also important to note that IRA distributions not going directly to a charitable organization are also subject to state income tax.

For community members who care deeply about the strength of the Jewish community, making a gift from one’s IRA is a great way to have a big impact on Jewish life. Talk with your tax accountant, attorney, or financial advisor to determine whether you should put this strategy to work for you now.

Making a direct gift from your IRA to the Jewish Alliance may be a smart way to help benefit the Jewish community.

At the Jewish Alliance, gifts from IRAs can be used to help support our Annual Campaign or add to or establish a permanent endowment fund. Community members who envision a future Jewish community are creating endowments that will touch the lives of generations to come. A trusted custodian of our community’s philanthropic capital, the Jewish Federation Foundation of Greater Rhode Island currently oversees more than $52 million in assets. Endowment funds established decades ago are still providing important financial support to our Jewish community today.

Although we are not permitted to use the IRA distribution to establish or add to a donor advised fund, many people choose to open donor advised funds at the Jewish Federation Foundation of Greater Rhode Island with year-end gifts of cash or appreciated securities. By doing so, individuals may decide how to grant those funds to charitable organizations at a later date, engage family members in their Jewish philanthropy and transfer philanthropic dollars to the next generation. Donor Advised Funds at the Jewish Federation Foundation of Greater Rhode Island have become a very popular choice for younger philanthropists, now that the minimum to establish such a fund was lowered to $2,500

The Jewish Federation Foundation of Greater Rhode Island is available to you and your tax and financial advisors to maximize the benefits of the IRA Charitable Rollover or speak to you about year-end giving in general. We have the knowledge and expertise to help you strengthen the Jewish community today or create a Jewish legacy, endowing your personal vision for the future

Please Note: The information in this article is offered for general informational and educational purposes and is not legal advice, nor financial advice. You should seek the advice of your professional advisor on all such mat-ters.

For more information: contact Edward M. Bruckner, Vice President of Financial Resource Development, at or 401-421-4111, ext. 174.