I want to evaluate the impact of the following.
Contribute 25% of my traditional IRA to a charitable gift annuity provided by my alma mater. It will pay a fixed 6.2% for life and provide a partial tax deduction to offset the taxes on the IRA withdrawal.
Question:
How do I enter this data? I know I have to set the load for annuities to 0 because I'm not purchasing an annuity.
Thanks
James
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James, I think you should not include the amount you are spending on this annuity under retirement accounts. Instead, you should enter the non-taxable part of the annuity income as annual non-tax related special receipts and the taxable part as annual taxable special receipts. best, Larry
Larry,
Ok I understand the following:
1. If my current IRA is $100,000 and I want to contribute $25,000 to a charitable gift annuity I would only enter $75,000 in my IRA. I also understand how to enter each year's annuity payment.
But,
I was looking for more information on entering the details. For example, Do I enter the $25k in the "Retirement Accounts/Choice of annuity" screen or is that screen just for purchased annuities? What about the "Pension and Annuities/Annuities" screen. What inputs go there?
I believe that Charitable Gift Annuities also provide a 1 time tax deduction, where is this entered?
Thanks
James
James,
You won't use the retirement or annuity screen at all for this, they weren't designed to deal with this type of annuity and you'll make yourself crazy trying.
The trick is probably something like this:
1. Enter $75K in your IRA.
2. Enter a $25K taxable special receipt in that year (assuming you're drawing from a non-Roth account).
3. Enter a $25k deductible special expenditure (that's the money going out for your 1 time tax deduction). If the whole 25K isn't deductible, break it into two special expenditures, one taxable, one not.
4. Enter the portion of the 6.2% income that is not taxable as a series of not taxable special receipts.
5. Enter the portion of the 6.2% income that is taxable as a series of taxable special receipts.
and you should be good to go.
Best,
Dick Munroe
Thanks Dick, Now I understand the process
James