I have found that many clients have substantial IRA and retirement plan benefits, and these balances make ideal gifts to their charitable beneficiaries after their death. These gifts avoid income tax because the IRAs and retirement benefits pass tax-free to the charitable organizations. But Roth IRAs are not as good as regular IRAs to give to charity, because Roth IRAs are generally not subject to income tax.
Also, in some prior years the IRS has allowed IRA owners who are 70 1/2 years old to transfer up to $100,000 of their IRAs per year directly to charity during their life. These “Direct Charitable Rollovers” simplified tax reporting and reduced or eliminated the clients’ “Required Minimum Distributions” from their IRAs for those years. However, as of the date of this blog, the “Direct Charitable Rollover” is not allowed. We hope that Congress will re-enact these rules to allow people to use their IRAs for charitable giving both during their lives and after their deaths.