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Club Connect comes to the Old Mill Elementary School in Palmer

club_connect-story02For most of us, there are two key ingredients for developing a life-long love of reading: a good book and a quiet, comfy corner to curl up into. Sometimes an ordinary classroom setting isn’t the ideal place to get swept away in a story or lose yourself in dialog. That’s where United Way Club Connect comes in.

This year, the United Way of Pioneer Valley was chosen nationally as one of ten United Ways to participate in Club Connect. They selected the Old Mill Elementary School in Palmer as an ideal place to give their students an even better shot at reading success. With club membership, comes the following benefits:

  • A Scholastic Reading Oasis, with more than 1,000 books and a comfortable, inviting space for children to read in throughout the year.
  • Access to an online website engaging children in a variety of reading activities 365 days a year.
  • Parent engagement, including emails and corporate incentive programs to reach parents and increase their involvement in their child’s reading.

This May, the Old Mill Elementary school opened their Reading Oasis, situated on the stage in the school cafeteria. A faux fireplace is circled with colorful beanbags and flanked by shelves teeming with books for all ages and reading levels.

On a recent Monday morning, as students streamed into the space, selected a book and plopped down in beanbag, Mrs. Jacqueline Haley, the school’s principal, was beaming. “I’d never imagined this space could be used this way,” she said. “It wouldn’t have been possible without United Way’s support.”

Steve Lowell, President of Monson Savings Bank, was also present. As a United Way board member, he understands the importance of early literacy and wanted to see for himself how the Reading Oasis worked. Joining students on the rug, he agreed it was an ideal place for young children to “get wrapped up in a good book. This can really make a difference in students’ lives.”

Beyond the pleasure reading can bring, it’s a fundamental building block of any student’s education.

“Research tells us that children who can read proficiently by third grade are much more likely to successfully graduate high school,” said Sylvia De Haas Phillips, Senior Vice President of Community Impact and Engagement for the United Way of Pioneer Valley. “That’s why United Way Club Connect is such a game changer for schools like Old Mill Elementary School in Palmer.”

United Way Club Connect is part of a broader effort to increase area graduation rates. United Way volunteers also tutor students and help with homework. Providing children with greater access to books, as well as a supportive environment where they can read, will help ensure they don’t fall behind. In fact, having regular access to a large book collection and a reading role model has a greater impact on a child’s reading frequency than household income. Reading frequency translates to reading fluency, the main ingredient in school success—not just in the early grades, but throughout a child’s academic career.

Altogether, generous individual and corporate donors have adopted 87 schools in 15 states in 2015 and 2016. They donated more than 43,500 books and impacted the lives of 46,000 students.

— Mark Roessler

A Conversation with Tom Senecal, PeoplesBank’s new President

Tom_S

PeoplesBank of Holyoke has been in the news a lot recently.

Last year, as the bank celebrated its 130th anniversary, the accolades kept pouring in. The Boston Globe declared the bank as a “Top Place to Work.” MassLive and the Republican’s readers voted it “the best mortgage lender,” and the Boston Business Journal singled the local institution out as a “Top Corporate Charitable Contributor.”

Though certainly impressive, for those familiar with the bank’s work, the praise wasn’t a surprise. PeoplesBank and the United Way of Pioneer Valley (UWPV) have long worked together to improve conditions for the region. Most recently they were among several area partners to launch three Thrive centers across Holyoke and Springfield—financial literacy learning centers that provide training and free tax preparation.

During a speech for the opening of one of the Thrive Centers, bank president Tom Senecal had noted how the bank’s commitment to the community—especially those who are most in need—is not a new chapter for them. It was, in fact, among the core reasons that the bank’s first president, Victorian-era industrialist William Skinner, had designated the institution as a mutual bank. He wanted to make certain they provided a pathway to financial stability for ordinary people.

“That being said, though,” Senecal said in a more recent interview with UWPV, “I want to make certain we’re looking to the future and not just to the past. When I think of PeoplesBank today, I think of innovation, technology, and providing customer service without friction. Looking at banking through the eyes of the customer. We’re always looking for ways to improve our online services and embrace new technologies. It’s important we stay ahead of the curve—stay innovative—in order to provide these products and services to our customers.

“Skinner was also very innovative for his time, but I think it’s important we maintain a balance—remembering what others brought to the institution, but also building off of that and keeping focused on the future.”

To that end, projects like Thrive are innovations Senecal embraces completely.

“Financial literacy is tremendously important to PeoplesBank and the community at large,” he said. “I’m passionate about it, and Thrive very much aligns with what we do. Being a community bank, it allows us to participate, understand and support the community” in a way that is meaningful.

Regardless of age or income level, financial literacy is a skill that everyone needs, Senecal said, adding with a laugh that there were people in his own family he thought could benefit from the courses Thrive offers.

Family is important to Senecal, and it’s a chief reason he lives in the Pioneer Valley.

“I was a Chicopee boy,” he said. “My Senecal roots go back quite a few generations in the Willimanset section of Chicopee. When I left high school, I went into the service. When I got out of the service, I went to UMass Amherst, and I graduated from the Isenberg School of Business. I came back to the area because it was my roots, I believe in this area.”

Asked what he thought accounted for his business being declared a top place to work, he was unequivocal: “An unbelievably engaged employee base.”

Elaborating, he said, “Doug [Bowen, Chairman and CEO] has fostered an organizational culture that is extremely employee engagement focused, and that appeals to me. I hope to continue that tradition of making sure our employees feel that way about this organization.”

He was quick to add, though, that what made PeoplesBank special wasn’t merely strong leadership.

“Our employees donate a tremendous amount of time volunteering—giving back to the community,” he said. “Our employees were recognized for being in the top ten in the state of Massachusetts, per capita, for employee donations. That’s not driven from the top down—as president of the bank, I can make large donations, but I can’t tell my employees what to give. That ranking from the Boston Business Journal is all up to them. That’s pretty cool.”

Hiring new employees who are similarly engaged and dedicated to the community has also been important. “It’s important everyone is part of the culture we’ve created here,” he said.

Asked to describe that culture, he responded, “Team-oriented. I read a book a while ago, Give and Take by Adam Grant. It measured the lives of people and organizations who were successful in life and tried to determine whether they were givers or takers. I believe PeoplesBank has a culture of givers. Not just financially, but they are generous with their time, their talent and willingness to collaborate.”

The United Way of Pioneer Valley has helped PeoplesBank channel some of this energy. Partaking in our annual Day of Caring event, over the past few years, the United Way has identified and organized volunteer opportunities for bank employees at Wistariahurst Museum in Holyoke, the Springfield Boys and Girls Club, YMCA of Greater Springfield, YMCA of Greater Westfield, and the Children’s Museum at Holyoke.

“People think of others before they think of themselves at PeoplesBank,” Senecal concluded. “It’s very different from anything I’ve seen at other organizations.”

— Mark Roessler

A Financial Success Center Planned for Westfield

Berkshire Bank Foundation has made a significant two-year donation to the United Way of Pioneer Valley (UWPV) towards the design and introduction of a Financial Success Center to be located in downtown Westfield, MA in early autumn 2016. Following the Financial Success Center model introduced in both Holyoke and Springfield, this will be named Thrive @ Westfield, and will be launched in partnership with the City of Westfield, Valley Opportunity Center, the Regional Employment Board of Hampden County, FutureWorks, and CareerPoint, as well as several other partners.

Financial Success Centers such as the Thrive Centers in Holyoke and Springfield provide free services such as individual financial coaching, financial literacy classes, resources for workforce development, Volunteer Income Tax Assistance (VITA) and access to income supports for low to moderate income individuals and families.

United Way of Pioneer Valley has a long history of convening local partners for innovative community initiatives that serve people throughout the region. Visit the UWPV website for more information at www.uwpv.org

Dowd Insurance: A Legacy of Connection

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Pictured from left to right: David Griffin Jr., John E. Dowd, Jr., and Melissa Salois-Blood.

 

The Dowd Insurance Agency first started working with the United Way 40 years ago when both organizations had offices in downtown Holyoke.

“When I started with the agency in the early 1980s, it was a different time back then,” said John E. Dowd Jr., the president and CEO of the company. His great grandfather founded the business in 1898. “Downtown was a bustling business community. Lawyers and accountants and other business people were all within walking distance of one another. We’d see them at the local lunch counter every day.”

As such, news travelled fast. When disaster struck a family or a business, people could react quickly to support the survivors.

“And if someone needed members for a new organization or committee,” Dowd said. “All they’d have to do is ask you when they saw you.”

Since then, of course, things have changed. While the city has struggled economically, Dowd Insurance has grown and their business now has five branch offices, serving clients across the region. Dowd’s headquarters have also expanded into a more convenient office park a few miles from their old location.

In many ways, the United Way has become the new commons where local leaders and volunteers can connect to address community needs.

“We’ve always been strong believers in being part of the community,” Dowd said. “It’s written into our mission statement. We’ve tried over the years to always increase the amount we donate to the United Way by a little bit, but we don’t think it stops there. You need to be involved, giving your time and talents, making sure that the organization remains viable, because they’re so critical to our community.”

“Working with the United Way has been a nice fit,” David Griffin Jr. agreed. Griffin works as an account executive for the agency, and his father is the executive vice president and treasurer. “As we’ve grown, it’s been great to be able to grow with the United Way and what they’ve been doing in the communities we serve.”

Griffin likes that in working with the United Way, “you can pinpoint where you want your resources to go, whether it’s through volunteering or giving financially.”

Griffin enjoys his long-term commitment of working with area youth, helping to support “after School programs or boys and girls clubs.” But he points out “the United Way can take care of lots of people’s interests, abilities and time constraints.”

Each year, the United Way of Pioneer Valley organizes Days of Caring, an opportunity for companies and teams of people to offer their services to the community, volunteering to take on tasks that will improve their neighborhoods.

“I’m on the board of directors over at the Wistariahurst museum in Holyoke,” Griffin said. “They do a Day of Service with the United Way there every year, and just hearing what’s been accomplished—just in one day around the facility—it’s been unbelievable. They had a team of 40 to 50 volunteers from People’s Bank. The team repainted the fence, moved plants around, and just did a general cleanup of the grounds. The director was beyond thrilled. She said how surprised she was that everyone seemed so happy. The museum supplied coffee and donuts, but they got so much more back. And this was just one location that day.”

“A personal connection is critical,” Melissa Salois-Blood agrees. As Dowd’s staff accountant and manager of the workplace fundraising campaign, she says it’s the personal connections that United Way inspires that matter the most.

“You can’t do this through email,” she said. “You need to create excitement. During the campaign each year, I visit each of the offices. Sometimes the satellite offices can feel a little left out or disconnected from the home office.” The campaign offers everyone at Dowd an opportunity to work together, doing something that “benefits themselves as well as the whole community.”

Asked whether being a family-run business had influenced their long-time collaboration with the United Way, Dowd was unequivocal.

“My family history in Holyoke goes back to the mid-1800s,” John Dowd Jr. said. “My great-great grandfather first came over from Ireland with his parents. They were part of a very different immigrant city where there wasn’t a lot of social organizations or safety nets around. It was very much survival of the fittest. People today often don’t understand the extent of the prejudice in those days, but it was beyond belief. There was nothing to protect them, so much so that people were openly hanging signs in their doors, “Irish need not apply.” If you were Irish, you were considered the lowest of the low on the social ladder.

“So, to overcome those prejudices and become a viable part of your community, contributing in positive ways—you didn’t come up through the ranks alone. You did that with other people,” Dowd said. “It’s people coming together to help each other rise up and overcome challenges society has presented them. Social organizations, like the United Way, evolved from these experiences. They were formed so that immigrants coming to the city from wherever didn’t have to encounter the same challenges and prejudices. And when one of these organizations helps you, you don’t forget.”

Being part of a family and a community, Dowd said, reminds you that no one succeeds alone.

“As human beings, we need to help each other,” he said. “Give more than you get, because at the end of the day, it all comes back. It’s a credo some people don’t understand until they experience it.”

—Mark Roessler

Area United Ways Unite to Raise Money to Support Area Children

“Show the Love for Kids” on Valentine’s Day 

WESTERN MASS, February 1, 2016 – United Way of Pioneer Valley, United Way of Hampshire County and United Way of Franklin County are collaborating for a new mobile giving campaign called “Show the Love for Kids.”

Aimed at smart phone donors, United Way’s Text-to-Give effort allow people to easily and efficiently contribute to programs that impact the lives of children in Franklin, Hampshire, and Hampden counties.

This year, more than 75,000 kids in our area will face hunger, over 5,000 kids will experience abuse and neglect and 7,000 third graders will struggle to read at grade level— and they need our help.

By texting the keyword HEART to the number 20222 via a cell phone, a donation of $10 will be made to your local United Ways and their programs that help kids. Centered around Valentine’s Day the $10 donation mobile giving campaign runs through the month of February and appears as a charge on a donor’s mobile-phone bill.

Jim Ayres, Executive Director of United Way of Hampshire County says, “At Valentine’s Day we take the time to show our love. Let’s take time to show the love to kids who are struggling and craving support for a positive future. As you get ready to make dinner reservations, buy flowers and pick up chocolates, also take the time to send a quick text message that makes a difference.”

“We are delighted to collaborate with our United Way partners on a great Text-to-Give initiative,” said Dora D. Robinson, president & CEO of United Way of Pioneer Valley “We hope our community will embrace Text-to-Give and make a big difference for children in the Pioneer Valley.”

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*A one-time donation of $10.00 will be added to the donor’s mobile phone bill or deducted from the donor’s prepaid balance. Messaging and data rates may apply. All charges are billed by and payable to the donor’s mobile-service provider. Service is available on most carriers. Donations are collected for the benefit of United Way by the Mobile Giving Foundation and subject to the terms found at www.hmgf.org/t. Donors can unsubscribe at any time by replying STOP to short code 20222; reply HELP to 20222 for help.

Contact:
Debra Foley
Director of Development & Marketing
United Way of Hampshire County
413-584-3962 x 105
deb@uwhampshire.org

Mark Roessler
Marketing & Communications Manager
United Way of Pioneer Valley
413-693-0239
mroessler@uwpv.org

Sandy Sayers
Executive Director
United Way of Franklin County
413-772-2168
SSayers@uw-fc.org

 

 

Charitable IRA Rollover—The Basics

At long last, Congress has passed and the President has signed the Tax Increase Prevention Act that includes a provision making permanent, once and for all, an individual’s ability to make a charitable gift from his/her IRA. Donors may now rely upon this law in their future financial, estate and charitable planning.

The charitable IRA rollover is a special provision that allows gifts directly from an IRA to a public charity without the gifted amount being considered income to the donor. It should be of keen interest to different kinds of donors:

  • those who elect the standard deduction on their federal tax returns
  • residents of states, like Massachusetts and Connecticut, where charitable deductions cannot be taken on state tax returns
  • all other taxpayers who may likely incur greater tax liability and costs by virtue of their adjusted gross income being increased should they make an IRA withdrawal and charitable gift, rather than using the charitable IRA rollover.

Essential Information:

  • The IRA owner must be at least age 70 ½ before making the gift.
  • The gift may be made only from an IRA and certain Roth IRAs.
  • The gift may satisfy some or all of an IRA owner’s Required Minimum Distribution.
  • The gift may be applied to satisfy an existing pledge to UWPV.
  • The gift may be designated to support a specific UWPV initiative.
  • The gift removes that amount from the owner’s gross estate.
  • The only limitation is that the aggregate gift cannot exceed $100,000 annually—

– A donor may make multiple IRA rollover gifts to the same public charity throughout the year.
– A donor may make IRA rollover gifts using multiple IRA accounts.
– A donor may make IRA rollover gifts to multiple public charities.
– Husband and wife each have a $100,000 limit from their respective IRAs.

A charitable IRA rollover gift is considered a qualified charitable distribution (QCD). It is a direct transfer to a public charity made by the donor’s IRA Administrator or Trustee at the donor’s request. As a QCD, the gift is not income to the donor nor, logically, is the donor entitled to a deduction.

The charitable IRA rollover procedure eliminates taking an IRA withdrawal into income which would then have to be added to a donor’s adjusted gross income (AGI). AGI is a threshold for calculating deductions, exemptions, tax credits, the amount of Social Security benefits subject to tax and for determining premiums for Medicare parts B and D. By not increasing AGI, a donor may enjoy significant tax savings and lower costs.

The donor cannot receive ANY goods or services from the charity in consideration of the gift and the gift must be substantiated in writing by the charity. According to the IRS, if a good or service offered would reduce the charitable deduction if this were an outright gift, then the gift will not qualify as a QCD and the full amount must be taken into income thus increasing the donor’s AGI.

To help you make a charitable IRA rollover gift to UWPV, there is available online:

  1. A sample letter for you to send to your IRA Administrator/Trustee requesting that an IRA rollover gift be made,
  2. A sample letter for you to send to UWPV notifying us of your gift intention so that we may be on the lookout for it, and
  3. Should you want more detailed information there is an in-depth educational FAQ that may address your specific questions.

Questions should be directed to Steven Toth, JD, MS, CLU, ChFC at UWPV
413-693-0237
stoth@uwpv.org

Disclaimer: United Way of Pioneer Valley does not provide legal, tax, accounting or other related professional advice. Such advice must be sought from the reader’s own advisors. The information provided here is for general informational purposes only.

 

 

The Charitable IRA Rollover: Convenient, Tax Efficient and now Permanent

In late December, President Obama signed the Tax Increase Prevention Act of 2015, an extensive piece of legislation that included, once and for all, a provision making permanent an individual’s opportunity to make a charitable IRA rollover gift.

No longer does a prospective donor have to wait to see whether Congress will extend this provision for the current year and whether, if extended, that there will be sufficient time to complete the charitable IRA rollover gift process. Permanency of a tax law is an important component of financial, estate and charitable planning because individuals can rely upon it thus providing them a sense of certainty regarding their planning decisions. Now individuals can rely upon the charitable IRA rollover being available every year.

Briefly, the charitable IRA rollover allows certain taxpayers to make charitable contributions to public charities without income tax consequences and have that charitable contribution qualify toward meeting some or all of the donor’s annual required minimum distribution (RMD).

To best explain the finer points of a charitable IRA rollover, the remainder of this bulletin will follow a question and answer format.

1) What is an IRA charitable rollover?

An IRA charitable rollover is considered a “qualified charitable distribution.” A QCD as it is called has the following requirements:

  1. the IRA owner must have attained the age of 70 ½, (it is recommended that the donor wait a day or two beyond the day he/she turns 70 ½ before making the gift).
  2. the charitable gift must be made directly from the IRA administrator or trustee to a public charity (not a donor advised fund or supporting organization),
  3. gifts may be made from only traditional IRAs and certain Roth IRAs (generally those in existence for not more than five years),
  4. the aggregate gift may not exceed $100,000 annually regardless of whether multiple IRAs are used or multiple charities are the gift recipients, (a husband and wife may each gift up to $100,000 annually from their respective IRAs),
  5. the exclusion from income only applies if the distribution would otherwise have been treated as taxable income, and
  6. the full contribution to the charity would have been deductible. As such there can be no goods or services (any quid pro quo) provided to a donor or even made available. Any goods or services even of nominal value may taint the entire gift causing it to be included in income.

2) What are the donor’s income tax consequences of making a charitable IRA rollover gift?

If the QCD requirements are met, the gifted amount is excluded from the donor’s income. To validate that the distribution is excluded from income, the gift must be substantiated by the charity indicating that no goods or services were given in consideration of the gift. Likewise, there is no deduction since the gifted amount is not considered income.

3) Without the charitable IRA rollover, what are the income tax consequences to a donor in its absence?

In the absence of the charitable IRA rollover provision, a donor who decided to use IRA account funds to make a charitable gift to UWPV would have the following income tax consequences:

  1. donor makes a withdrawal from his/her IRA. The amount of the withdrawal must be included as income on the donor’s current year federal income tax return.
  2. donor deposits the withdrawal check into his/her checking account.
  3. donor writes a check to UWPV for the amount of the withdrawal.
  4. donor deducts the amount of the gift to UWPV as an itemized charitable deduction on Schedule A.

This series of steps zeroes out any current income tax liability attributed to this transaction and seems to suggest that a special charitable IRA rollover provision is unnecessary; however, it opens a Pandora’s box of seemingly endless undesired tax and related costs because the withdrawn amount must be recognized as income. This increases the donor’s adjusted gross income (AGI) and here lies the problem.

The adjusted gross income and a closely related term—modified adjusted gross income—are threshold amounts from which certain itemized deductions, personal exemptions, taxability of Social Security benefits, determination of Medicare premiums, eligibility for and phase-out of various tax credits and other vital calculations are made.

Please note that this withdrawal and deduction process described above remains intact and must be used for charitable gifts made from all other types of qualified retirement plans such as 401(k) or 403(b) plans unless those plans are converted to IRAs or Roth IRAs to take advantage of the charitable IRA rollover and must also be used for IRA gifts in excess of the $100,000 annual limit imposed by the charitable IRA rollover even assuming that the rollover procedure is used for the first $100,000. Unfortunately, an uninformed taxpayer/donor may still use the withdrawal and deduction process thinking that his/her income tax result will be the same as if the charitable IRA rollover procedure were used. This would be a potentially costly mistake.

4) I’m contemplating a charitable gift from my IRA. Can you provide specific examples where it would be to my advantage to use the charitable IRA rollover?

Unnecessarily increasing your adjusted gross income may increase your income tax liability through reduced or phased out deductions, personal exemptions and tax credits. A greater amount of your Social Security benefit may be subject to tax and your Medicare premiums for parts B and D may be higher.

  1. If a donor elects the standard deduction: By using the charitable IRA rollover, the donor eliminates the concern of taking an IRA withdrawal into income without the availability of an offsetting deduction as there is no income.
  2. If a donor lives in Massachusetts or Connecticut: The charitable IRA rollover eliminates the concern that neither Massachusetts nor Connecticut allows itemized charitable deductions on its individual income tax returns.
  3. If a donor has significant medical expenses: Those expenses are deductible on Schedule A to the extent they exceed 10% of adjusted gross income (if a taxpayer or spouse was age 65 or older in 2013 they are grandfathered under the 7.5% threshold until 2017). By using the charitable IRA rollover, a donor’s AGI will not be increased thus decreasing the likelihood that his/her medical expense deductions may be reduced or eliminated.
  4. If a donor has miscellaneous itemized deductions: Job hunting costs, union dues or tax preparation fees, and many other miscellaneous deductions are deductible to the extent they exceed 2% of AGI. Again, by using the charitable IRA rollover, the donor’s AGI will not be increased thus decreasing the likelihood that his/her miscellaneous deductions will be reduced or eliminated,
  5. If a donor gives more than 50% of his/her AGI to charity in a given calendar year: By using the charitable IRA rollover, the gift will not be included in determining the 50% of AGI deduction limitation perhaps enabling the donor to make additional charitable contributions.
  6. For high income taxpayers: The revived Pease limitation will reduce itemized deductions based upon the lesser of 3% of AGI over ($309,900 married filing jointly or $258,250 single for 2015) or 80% of otherwise allowable itemized deductions. Again, the higher the taxpayer’s AGI, the more tax liability will be incurred in this case through reducing itemized deductions.
  7. For high income taxpayers: Personal exemptions ($4000.00 in 2015) will be reduced by 2% for every $2500.00 or portion thereof that AGI exceeds a threshold for a given filing status. This phase-out begins at the same income levels cited at 6) above and are fully phased out at $380,750 single and $432,400 married filing jointly.
  8. The amount of Social Security benefits that are taxable is calculated using a formula based on AGI. The higher a taxpayer’s AGI, the more of his/her Social Security benefit may become taxable.
  9. Medicare premiums: Medicare premiums, specifically parts B and D, are determined based upon a formula using adjusted gross income. The higher one’s AGI the higher the premium assessed.
  10. Tax credits: Many tax credits (tax credits are a dollar for dollar reduction in tax liability and, as such, are more valuable than a deduction) are phased out as AGI increases

5) May a charitable IRA rollover gift be used to satisfy a donor’s existing pledge?

Yes, a charitable IRA rollover gift may be used to satisfy a donor’s existing pledge; however, it cannot be used to fund a charitable gift annuity or charitable remainder trust.

6) May a charitable IRA rollover gift be designated for a specific UWPV purpose such as Community Impact or Education?

Yes, a charitable IRA rollover gift may be designated for a specific UWPV purpose.

7) In addition to making a lifetime charitable IRA rollover gift to UWPV, may a donor also designate UWPV as the beneficiary of that IRA account?

Yes, designating a charitable organization as beneficiary of an IRA or other retirement plan is common because such an asset is viewed as undesirable from a tax perspective as it is subject to potential estate tax in a decedent’s estate and the remaining account value is income taxable to an individual beneficiary whereas, if paid to UWPV, the IRA’s value is removed from the decedent’s estate and being that UWPV is tax exempt, the remaining account value will be received income tax free.

Steps For Making a Charitable IRA Rollover Gift to UWPV

We have made this process as seamless as possible by providing you with two sample form letters downloadable from our website. Simply fill in the required information and either mail or fax them.

First: using the sample letter to Administrators/Trustees, fill in the required information in the blank spaces provided and mail or fax to your IRA Administrator or Trustee. Your IRA Administrator or Trustee may ask you to complete its own charitable IRA rollover authorization form before processing your request. If so, promptly complete and return it especially if year-end is approaching.

Second: using the sample letter to UWPV, fill in the required information and mail or fax to UWPV indicating your gift intention. Once received, we will be watching for your charitable IRA rollover gift so that we may promptly substantiate it in writing to you.

If you are contemplating additional IRA rollover gifts to UWPV in 2016 or plan to make gifts from multiple IRA accounts, simply use the two sample letters for each separate transaction.

Summary: In the absence of the charitable IRA rollover, many IRA owners did not use their IRA accounts for lifetime charitable giving simply because of the myriad of undesired tax pitfalls that could impose increased tax liability and additional costs. Now they can! The charitable IRA rollover provides a great opportunity for IRA funds to be used in charitable giving.

Questions should be directed to Steven Toth, JD, MS, CLU, ChFC at UWPV
Office: 413-693-0237
Email: stoth@uwpv.org

Disclaimer: United Way of Pioneer Valley does not provide legal, tax, accounting or other related professional advice. Such advice must be sought from the reader’s own advisors. The information provided here is for general informational purposes only.

 

 

Financial Literacy Task Force Report Delivered

Last week, the Financial Literacy Taskforce presented their findings to Beacon Hill. Our own Sylvia deHaas-Phillips was part of the team, and a PDF of the full report can be found here. The team found that a lack of access to tools and information necessary for financial success endangers the state’s economy. This year, the UWPV and their partners have helped open three Thrive Financial Success Centers aimed at solving this problem.

Now is the Time for Year-End Giving

The Time is Now for Year-End Giving

With the 2015 calendar year drawing to a close, an easy and rewarding way to help you achieve both your financial and philanthropic objectives is to increase deductions on your federal income tax return through charitable giving. Timing and attention to requirements is critical, though! Some types of gifts must be received by us before the year’s end. Donors must pay close attention as to the type of gift, the method by which it is transferred, and the applicable deadlines.

Below are the deadlines that must be met for different types of gifts to comply with IRS requirements and allow for gift processing and acknowledgement so that the donor may treat the gift for 2015 tax purposes.

Cash or Check

1) Gifts of cash or check hand delivered to our office by noon on December 30.

2) Gifts made by check dated on or before December 31 and mailed via the U.S. Postal Service with a postmark stamped on or before December 31.

3) Checks sent by a medium other than U.S. mail (such as FedEx or UPS) must be received at our office by noon on December 31.

Credit Card

Credit card gifts are effective on the date your card is charged (allowing time for the charge to be completely processed), thus:

1) Credit card gifts mailed via U.S. Postal Service, FedEx and UPS must be received at our office by close of business on December 28.

2) Credit card gifts via telephone must be completed by close of business on December 28.

3) Credit card gifts made online must be completed by December 28.

Publicly Traded Appreciated Securities

The effective date of the gift depends upon how the securities are transferred—hand delivered, U.S. mail, FedEx, UPS, private courier, or electronic transfer—and who they are delivered to. Privately held stock and mutual fund shares typically require more time and may not be able to meet the deadline of December 31. Publicly traded securities, however, should not be a problem.

For detailed information on how to gift securities to the United Way of Pioneer Valley (UWPV), you may access our one page procedure sheet on the UWPV website by clicking here. The form includes the name and contact information of our local stockbroker representative. The gift must be credited to the UWPV account by close of our stock brokerage firm’s business on December 3to count as a 2015 gift.

Gifts from an IRA

These gifts can be made in potentially either of two ways: the IRA charitable rollover (restricted to IRAs only) if legislatively enacted for calendar year 2015 or by making a withdrawal followed by a charitable gift from an IRA or other qualified retirement plan including 401(k), 403(b), and Keogh plans as examples.

The IRA charitable rollover provides a simple, tax advantaged method for those over age 70 ½ to make a charitable gift. Its extension for 2015, however, is bogged down in Congress. A vote is scheduled for December 11. Timing, deadlines and other requirements will be dependent upon final statutory language.

The rollover procedure calls for a direct transfer from the donor’s trustee or IRA administrator to the charitable organization. As such, the amount of the gift—up to a $100,000 maximum—is not taken into income nor is a corresponding deduction available. It may be used, though, to satisfy a donor’s required minimum distribution (RMD) for 2015. This gift is called a qualified charitable distribution or QCD. The rollover provision has a history of being re-enacted at the last minute, so it is most likely to be available for 2015, but not as of this writing. Its status will be publicized once Congress acts.

As an alternative, a charitable gift may be made via an IRA withdrawal followed by a subsequent gift to a charitable organization (remember there is a 10% premature distribution penalty if the donor is younger than 59½ and required minimum distributions must begin by age 70½). This alternative works with qualified retirement plans as well as IRAs. In this case, the withdrawal amount must be included in the donor’s income, and, assuming this amount is gifted to charity, a corresponding deduction is available to “zero out” the transaction. If your gift is made by check, refer to the section above entitled gifts made by cash or check.

Note: The potential downside of this method is that the donor’s adjusted gross income will be inflated by the amount of the withdrawal even though subsequently deducted. Adjusted gross income is a threshold upon which a number of deductions, exemptions and credits are based, and this may negatively impact some donor/taxpayer’s income tax liability. The 50% of adjusted gross income deduction limitation also applies to non-IRA charitable rollover gifts.

Roth IRA Conversion during 2015

Another strategy that some individuals incorporate into their long range financial plan, but that creates a current income taxable event is a Roth IRA conversion. If you converted your traditional IRA to a Roth IRA during 2015, you will have triggered additional income tax liability. A charitable gift made in the same calendar year as a Roth conversion can provide a deduction that can reduce this increased liability. A window of opportunity exists if you have not considered this tax reduction idea. If your gift is made by check, refer to the section above entitled gifts made by cash or check.

SUMMARY: Year-end charitable giving provides individuals with an opportunity to obtain desired, last minute tax deductions while advancing their philanthropic objectives; however, close attention must be paid as to the type of gift, the method by which it is transferred, and the deadline that must be met for the gift to qualify as being made and deductible in 2015.

Questions should be directed to Steven Toth, JD, MS, CLU, ChFC at UWPV.

Office: 413-693-0237

Email: stoth@uwpv.org

 Disclaimer: United Way of Pioneer Valley does not provide legal, tax, accounting or other related professional advice. Such advice must be sought from the reader’s own professional advisors. The information provided here is for general informational purposes only.

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