Milestone 3 - How might charitable giving impact the income...

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How might charitable giving impact the income, gift, or estate tax outcome for your client? The American Taxpayer Relief Act of 2012 contained several provisions that may affect your clients' charitable giving strategies in 2013. Among the changes, the current law allows direct donations to charities from IRAs 1 . But, it is important to note that private foundations, supporting organizations, and donor-advised funds — such as the Giving Account at Fidelity Charitable — do not qualify to receive tax-free distributions from IRAs. However, these entities can accept donations of the assets in an IRA at death, either through an IRA beneficiary designation or through a will. This article focuses on inheritances from traditional IRAs, 401(k)s or 403(b)s that consist only of pre-tax contributions and associated earning. Withdrawals from these accounts are subject to income taxes 2 . (For simplicity's sake, we will use the shorthand "IRA" when discussing these accounts.) IRA inheritors may lose a lot to taxes T
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