Going, Going, Almost Gone…

You have the opportunity of a lifetime to reduce your income taxes and to remove tax-disadvantaged assets from your estate with a gift to the Overlook Foundation. The COVID Relief Act of December 2020 extended the “unlimited” charitable deduction for cash gifts to public charities through the end of 2021. You can benefit us and your bottom line, but you must act right away.

Who should act? 1) Anyone with a multi-year pledge to Overlook Foundation; 2) anyone with unneeded IRA assets who is 70½ or older; or 3) anyone who experienced a significant infusion of income in 2021.

Why act now? The provision governing this tax deduction expires December 30, 2021.

Should I act sooner? Yes. If you plan to create a qualified charitable distribution from an IRA, paperwork and custodial review require time before transfers can occur.

What’s involved for outright gifts of cash? Simply transfer a cash (check, ACH, or wire) so it reaches Overlook Foundation before the close of business Thursday, December 30, 2021. If you itemize, you gain a charitable income-tax deduction for gifts to a public charity (but not to donor-advised funds or supporting organizations) up to 100 percent of your adjusted gross income. And you can carry over any unused portion of the deduction for five subsequent years. The IRS defines Overlook Foundation as a public charity.

How does this law help with multi-year pledges? By accelerating future gifts into 2021, you take advantage of this singularly large deduction and can carry-over any unused deduction another five years.

What are the benefits of a qualified charitable distribution from an IRA? You support Overlook Foundation at the same time you remove tax-disadvantaged IRA assets from your estate, up to $100,000 per year. You must be 70½ or older, and whatever amount you choose must go directly from your IRA to us. The gift counts against your annual required minimum distribution from your IRA but triggers no federal income tax and no charitable income-tax deduction.

What about gifts from 401(k) and other retirement plans? They do not qualify under this or any other law. But there is a solution. If you can transfer assets without penalty from your other retirement plans, do so directly to an IRA and then distribute up to $100,000 to charity from the IRA.

Do gifts of securities qualify for this “unlimited” deduction? No. But with recent increases in stock market valuations, appreciated assets held more than one year still make great assets to donate. With such gifts you avoid capital-gains taxes on the appreciation and receive a federal income-tax deduction for the full value of the gift, perhaps as much as 30 percent of your adjusted gross income, depending on your other itemized deductions. This information is for educational purposes only and does not constitute financial or legal advice. To determine what the COVID Relief Act of December 2020 can accomplish for you, consult your qualified legal or financial adviser.

For more information, contact Kenneth Cole, director, planned giving and campaigns, at 908.522.2181 or kenneth.cole@atlantichealth.org.