The Lutheran Community Foundation

Charitably-minded clients who are converting to Roth IRAs in 2010 may seek tax savings as part of the conversion.  Recent articles in the New York Times and Chronicle of Philanthropy point out how donors can benefit from creating a charitable gift annuity when shifting money from a traditional IRA into a Roth.  Visit LCF's resource page on Roth IRA Conversions for a video overview, helpful links, client materials and timing tips. 

From the Chronicle of Philanthropy:

"Charitable giving can help offset some of that tax liability, notes [Robert F.] Sharpe. He points to a recent New York Times article that provides an illustration of how a donor who shifts $100,000 into a Roth IRA can save 16 percent of the $35,000 he would owe in taxes by using some of the money to set up a charitable gift annuity.

Not only would the arrangement provide the donor's heirs with nearly $75,000 tax free at his or her death; it would also provide a small income stream to the donor during his or her lifetime. And money left over in the annuity, an estimated $42,000, would go to a charity of the donor's choosing.

"Donors are going to be reading about this idea and calling development officers who don't have a clue in many cases," says Mr. Sharpe. That, he says, could hurt them when competing with nonprofit groups that are prepared to work on gifts related to Roth IRA conversions."

Full Article: "Retirement Savings Are Likely to Motivate Gifts in 2010"