There is a little known strategy that can create immediate tax savings for charitable givers, especially those who may realize a spike in income due to events like a Roth IRA conversion. The strategy uses a reversionary Charitable Lead Trust, a.k.a. “iCLAT.” This video features estate planning attorney and iCLAT expert Brad Gornto explaining how iCLAT works. You are encourage to watch the entire video so you can see the numbers brought to life.

Resources:
For a more comprehensive explanation of the iCLAT strategy, please visit our website and search for Brad Gornto under Past Webinars: www/financialexpertsnetwork.com/past-webinars

You should also visit www.iclat.net for even more detailed information.

#taxsavings #charitabledeductions #rothiraconversion #incometaxsavings…(read more)

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Tax Savings for Charitable Givers Doing a Roth IRA Conversion

Making contributions to your Roth IRA is an excellent way to prepare for retirement. It is an opportunity to accumulate wealth that you can depend on when you retire. Contributing after-tax dollars into a Roth IRA allows for tax-free withdrawals in the future, which is a great benefit. But, did you know that if you are a charitable giver, you could save even more by doing a Roth IRA conversion?

What is a Roth IRA Conversion?

A Roth IRA conversion is simply moving all or a portion of your traditional IRA or 401(k) into a Roth IRA. Doing this conversion means that you will pay taxes upfront on any pre-tax contributions, but you won’t be taxed on any distributions in the future. You can do a Roth IRA conversion regardless of your income level and regardless of age, so it is accessible to everyone.

How Do Charitable Givers Benefit from a Roth IRA Conversion?

Charitable givers benefit from Roth IRA conversions because of something called the qualified charitable distribution (QCD) rules. If you are over the age of 70 1/2, you can donate up to $100,000 per year from a traditional IRA or Roth IRA to a qualified charity tax-free. This is called a qualified charitable distribution, and it satisfies your required minimum distribution (RMD) for that year. However, if you have done a Roth IRA conversion, you will have already paid taxes on the pre-tax contributions, and so your QCD will be tax-free, and you won’t owe taxes on your charitable donations.

Additionally, Roth IRAs do not require account holders to take RMDs, so if you are 72 or older, you can still make contributions to your Roth IRA and maintain control over the funds rather than being required to take RMDs from a traditional tax-deferred account.

What are the Benefits of Roth IRAs for Charitable Givers?

Charitable givers may find Roth IRAs more appealing than traditional tax-deferred accounts for several reasons. Firstly, you can make contributions to a Roth IRA at any age, allowing you to continue growing your wealth throughout your life. Secondly, Roth IRA withdrawals are tax-free in retirement, even on the gains you accumulate, whereas tax-deferred accounts will be taxed at your normal income tax rate when you withdraw, potentially increasing your tax burden in retirement. Finally, Roth IRAs offer more flexibility for estate planning and passing on wealth to your heirs. Roth IRAs do not require RMDs, so you can pass the account to your heirs, and they can continue to enjoy tax-free withdrawals, potentially for decades.

Conclusion

Charitable giving is a great way to make an impact in the world while enjoying tax benefits. By doing a Roth IRA conversion and taking advantage of the QCD rules, you can maximize your charitable donations while saving on taxes. Additionally, Roth IRAs offer more flexibility, tax-free withdrawals, and a more significant impact on your retirement plan. Consider speaking to a financial advisor to assess whether a Roth IRA conversion and charitable giving is right for you.