How You Can Track Down an Unclaimed Life Insurance Policy

When my dad died, we thought he had a life insurance policy, but we have no idea how to track it down. Any suggestions?

Lost or forgotten life insurance policies are very common in the U.S. According to a study by Consumer Reports, one out of every 600 people is the beneficiary of an unclaimed life insurance policy with an average benefit of $2,000.

Although, there is currently not a national database for tracking down these policies, there are a number of strategies and a few new resources that can help your search. Here are several tips to help get you started.

Search records: Check your dad's financial records and important papers such as a life insurance policy, records of premium payments or bills. Also, contact his employer or former employer benefits administrator, insurance agents, financial planner, accountant, attorney or other adviser and ask if they know about a life insurance policy. You may want to check safe-deposit boxes, monitor the mail for premium invoices or whole-life dividend notices. You may want to review old income-tax returns. The returns would help you find interest income from, and interest expenses paid, to life insurance companies.

Get help: Use your favorite search engine to see if there are any services that offer a policy locator tool in the state where the policy was purchased. There are also six state insurance departments (Illinois, Louisiana, Michigan, New York, North Carolina and Oregon) that have free policy locator service programs.

Contact the insurer: If you suspect that a particular insurer underwrote the policy, contact that carrier's claim office. The more information you have, such as your dad's date of birth and death, Social Security number and address, the easier it will be to track down. You will be able to find the contact information for most insurance carriers by looking up their contact information through your favorite search engine.

Search unclaimed property: If your dad died more than a few years ago, benefits may have already been turned over to the unclaimed property office of the state where the policy was purchased. You may be able to locate records or find links to each state's unclaimed property division by contacting the National Association of Unclaimed Property Administrators.

If your dad's name or a potential benefactor's name produces a search result, you will need to prove your claim. The required documentation can vary by state and is detailed in claim forms. A death certificate might also be necessary to prove your claim.

Search fee-based services: There are several businesses that offer policy locator services for a fee. You can search for reputable data-sharing services for life and health insurance companies through your favorite search engine.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

 

Published November 12, 2021

IRS Tips for 2021 Charitable Gifts

In IR-2021-214, the Internal Revenue Service (IRS) encouraged taxpayers to use the special tax provisions for charitable donations in 2021.

The 2021 standard deductions have been increased to $25,100 for married couples and $12,550 for single persons. Individuals over age 65 benefit from an additional $1,700 deduction and married couples both over age 65 add $2,700. Therefore, a married couple of retirement age may have a standard deduction of $27,800. With the enhanced standard deductions stemming from the Tax Cuts and Jobs Act, approximately nine out of ten families do not itemize. As a result, only about 10% of taxpayers choose to itemize.

The IRS reminds taxpayers who take the standard deduction that they can also benefit from an "above-the-line" charitable deduction. Single individuals may deduct up to $300 and the amount is increased to $600 for married couples filing a joint return.

The $300 or $600 deduction includes cash gifts made by check, credit card or debit card. It also may include cash amounts for unreimbursed out-of-pocket expenses for volunteers with a qualified charitable organization. Gifts of securities, personal services, household goods or other property do not qualify as "cash" contributions.

Gifts must be made to qualified charities. To check the status of a charity, use the IRS Tax Exempt Organization Search tool on IRS.gov. Not all organizations may appear in the search tool. There are some charitable gifts that do not qualify for the $300 or $600 deduction. A gift to a donor advised fund, a supporting organization, a charitable remainder trust or a deduction carryforward from a prior year does not qualify.

Taxpayers are reminded to keep appropriate records to substantiate their deductions. Gifts of $250 or more require a contemporaneous written acknowledgment from the charity prior the donor to filing the tax return. Taxpayers should also retain a canceled check or credit card receipt for their cash contributions.

For taxpayers who itemize deductions, it may be beneficial to bunch gifts. Some taxpayers make most of their charitable gifts every other year and then take the standard deduction in alternate years. By "bunching" your charitable gifts, you may benefit from larger charitable deductions in alternate years.

Generous donors are reminded that the option exists to deduct up to 100% of adjusted gross income this year. Some individuals with large retirement plans have taken substantial distributions and are making major gifts to nonprofits. The 100% deductibility limit also requires the gift to be a cash gift to the nonprofit. Gifts to a supporting organization or donor advised fund do not qualify for the higher limit.

Editor's Note: All individuals with charitable intentions should visit with their tax advisors prior to the end of 2021. This is particularly important for those who are planning to make a bunched gift or a major gift.

Tips and Tools for Family Caregivers

Can you recommend any resources that offer help to family caregivers? I have been taking care of my 86-year-old mother and could use some help.

Caring for an aging parent or other loved one over a period of time can be very challenging both physically and mentally. Fortunately, there are a number of tips and services that may help lighten the load. Here are several to consider.

Assemble a care team: A good first step is to put together a network of people including family, friends and neighbors that you can call on when you cannot be there or you need a break.

Tap local services: Many communities offer a range of free or subsidized services that help seniors and caregivers by providing home delivered meals, transportation, senior companions and more. Call 211 to find out what is available in your community.

Use short-term respite services: Some organizations may offer short-term care for your mom so you can take some time off. To locate services in your area, try the Eldercare Locator at eldercare.acl.gov.

Hire in-home help: You may want to consider hiring a part-time home-care aide that can assist with preparing meals, housekeeping or personal care. Costs can run anywhere from $12 to $30 an hour or more depending on where you live and the qualification of the aide. To find help through an agency, use Medicare's search tool Medicare.gov/care-compare. To find someone on your own, which may be more affordable, try asking friends, neighbors, doctors or others who may be able to provide recommendations. You may also try using your favorite search engine to find reputable aides who have undergone background checks.

Use financial tools: If you are handling your mom's finances, you can make things easier by arranging direct deposit for her income sources and setting up automatic payments for her utilities and other routine bills. Also, consider signing your mom up for online banking with her bank so you can pay her other bills and monitor her account anytime. If you want or need help, there are professional daily money managers who can do it for you. These professionals often charge between $60 and $150 per hour.

If your mom is lower-income, you may be able to locate financial assistance programs in her area that can help pay for her medications, utilities, health care and other needs.

Get insurance help: If you have questions about what Medicare or Medicaid covers, or about long-term care, your State Health Insurance Assistance Program (SHIP) provides free counseling on all these issues. Call 877-839-2675 or visit ShiptaCenter.org to locate a nearby counselor.

You can also get help at Medicare.gov or by calling 800-633-4227. The Medicare Rights Center also staffs a helpline and can be reached by calling 800-333-4114.

Tap other resources: There are a number of other organizations you can draw on for additional information, such as local nonprofits and government agencies. The U.S. Department of Veterans Affairs (www.caregiver.va.gov) offers caregiver support services to veterans and even spouses of veterans.

Take care of yourself: Make your own health a priority. Being a caregiver is a big job that can cause emotional and physical stress and lead to illness and depression. The only way you can provide the care your mother needs is to make sure you stay healthy.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

 

Published November 5, 2021

Protect Yourself Against Abdominal Aortic Aneurysms

Can you tell me about stomach aneurysms? My father died from one about 10 years ago and I wonder if I am at increased risk of developing one myself.

While you do not hear much about them, stomach aneurysms, also known as abdominal aortic aneurysms, are very dangerous and the 10th leading cause of death in men over 55. They also tend to run in families, so having had a parent with this condition makes you much more vulnerable yourself.

An abdominal aortic aneurysm (AAA) is a weak area in the lower portion of the aorta, which is the major artery that carries blood from the heart to the rest of the body. As blood flows through the aorta, the weak area bulges like a balloon and can burst if it gets too big, causing life-threatening internal bleeding. In fact, nearly 80% of AAAs that rupture are fatal, but the good news is that more than 9 out of 10 detected early are treatable.

Risk Factors


Around 200,000 people are diagnosed with AAAs each year, but estimates suggest that another two million people may have it but not realize it. The factors that can put you at increased risk are:
  • Smoking: 90% of people with an AAA smoke or have smoked.
  • Age: Your risk of getting an AAA increases significantly after age 65 in men, and after age 70 in women.
  • Family history: Having a parent or sibling who has had an AAA can increase your risk to around one in four.
  • Gender: AAAs are five times more likely in men than in women.
  • Race: White people develop AAA more commonly than people of other ethnicities.
  • Health factors: Atherosclerosis, also known as hardening of the arteries, high blood pressure and high cholesterol levels also increase your risk.

Detection and Treatment


Because AAAs usually start small and enlarge slowly, they rarely show any symptoms, making them difficult to detect. However, large AAAs can sometimes cause a throbbing or pulsation in the abdomen or cause a deep pain in your lower back or side.

The best way to detect an AAA is to get a simple and painless 10-minute ultrasound screening test. All men over age 65 that have ever smoked, and anyone over 60 with a first-degree relative (parent or sibling) with an AAA, should talk to their doctor about getting screened.

You should also know that most health insurance plans cover AAA screenings. Medicare typically covers screenings to individuals with a family history of AAAs and for men between the ages of 65 and 75 who have smoked at least 100 cigarettes during their life.

If an AAA is detected during screening, how it is treated will depend on its size, rate of growth and your general health. If caught in the early stages when the aneurysm is small, it can be monitored and treated with medication. If the aneurysm is large or enlarging rapidly, you will probably need surgery.

AAA Protection


While some risk factors like your age, gender, race and family history are uncontrollable, there are a number of things you can do to protect yourself from AAA. For starters, if you smoke, quitting may reduce your level of risk. Visit SmokeFree.gov or call 1-800-QUIT-NOW for smoking cessation resources. You also need to keep tabs on your blood pressure and cholesterol levels. If these are high consult your doctor on how to lower them through diet, exercise and if necessary, medication.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

WCCF Donors Award Grants to Local Organizations

Grants totaling over $33,000.00 were awarded to non-profit organizations serving Washington County by the generous donors of the Washington County Community Foundation for the Fall 2021 grant cycle.  Grants are awarded from the Foundation’s Touch Tomorrow Funds, which were established by several outstanding donors.

Outside the Walls was awarded $1992.00 to assist with building wheelchair ramps for those in need in order to provide a safe way for residents to enter and exit their homes.

Children in Washington County will once again discover the world of financial literacy due to a $2500.00 grant to Junior Achievement.  The program involves business people to enter classrooms to share workforce experience while teaching sound economic principles such as work readiness, entrepreneurship, and financial literacy.

Dare to Care Food Bank has been awarded a $6000.00 grant to continue their School Pantry Program in the community.  Through the program, Dare to Care provides school-age children facing hunger have nutritious food for the weekend. 

The lights on the courthouse are ready for a little TLC.  The Washington County Commissioners have been awarded a $5000.00 grant to provide maintenance to the existing lights as well as creating a fund within the county as a reserve for future maintenance.

Volunteer firefighters in Jackson Township will be safer thanks to a $12,000.00 grant to purchase new structural fire coat and pants sets that are safety compliant with the National Fire Protection Agency.

Fire up your BBQ skills because the Town of New Pekin is making improvements to the BBQ fire pits at the park through a $6000.00 grant that will be used to pour a concrete floor in the structure, making it safer for the community to participate in outdoor activities. 

Washington County Community Foundation is a nonprofit public charity established in 1993 to serve donors, award grants, and provide leadership to improve Washington County forever

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 D. Jack Mahuron Education Fund Recipients

The D. Jack Mahuron Education Fund was established at the Washington County Community Foundation to encourage educators and staff to teach in innovative ways.  This year, the fund has awarded several teachers in the county school corporations over $4000.00. 

Students at West Washington Junior/Senior High School will be creating an outdoor learning space, expanded from an existing structure, where open-air learning will occur.  This is a hands-on self-motivated class project, let by teacher, Samantha Green.

The STEAM learning centers at Bradie Shrum will see more materials for students to collaborate, think critically, and problem-solve.  The Creation Station, led by Crystal Mikels, and the Imagine Lab, led by Emily Johnson will utilize snap circuits, building boards, marble run sets, and several other STEAM themed building materials.

Pop It! is really popular right now and two Bradie Shrum Elementary School teachers are using that to their advantage in the classroom.  Lorie Campbell, reading specialist, will be showing kinesthetic foundation skills of reading through the Pop It! activities and Lesle Leis, 3rd grade special education teacher, will be using the Pop It! to improve student math skills in a fun manner.

Brooke Ingram’s 1st grade Bradie Shrum classroom will be getting several facelifts throughout the year due to a flipped classroom concept.  For example, when they study bats, the classroom will be transformed into a bat cave.  How exciting!

East Washington Elementary students led by Leah Starrett will get a chance to play backyard games in PE with the purchase of equipment that will also encourage families to participate in the same games at home.

Lincoln Jones’ East Washington engineering students will be exploring sports science via blast motion sensors that will capture swing speeds and be analyzed and understood by the user as far as data capture, storage, and processing.

Students in Andrea Gorman’s Bradie Shrum Elementary music classes will be experiencing “Mallet Madness” through the utilization of mallet percussion while incorporating songs, stories, and poems to promote literature connections.

JD Wade-Swift’s Salem High School Interactive Media class will be getting their newscast prompts from a new teleprompter in efforts to produce a more professional show while improving eye contact and speech patterns with viewers.

Washington County Community Foundation is a nonprofit public charity established in 1993 to serve donors, award grants, and provide leadership to improve Washington County forever

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IRA and 401(k) Designated Beneficiary Options

 

Each year, IRAs and 401(k)s are subject to required minimum distributions (RMDs). Because the distributions start at just under 4% at age 72 and then slowly increase, many IRA and 401(k) plans earn more than those payouts and will continue to grow. While the distributions will become larger as the owner ages, most individuals will eventually pass away with an IRA or 401(k) balance reasonably close to the value of their plan at age 72.

For this reason, the eventual distribution options for an IRA or 401(k) are quite important. For many individuals, the IRA or 401(k) may be the largest asset in their estate.

IRAs and 401(k)s are transferred to a designated beneficiary that is selected on an IRA or 401(k) custodian's form. The five common choices for designated beneficiary are the surviving spouse, children, charity, a trust for children or a trust for spouse and children.

1. Spouse as Beneficiary


The most common choice for a married couple is to select the surviving spouse as the designated beneficiary of an IRA or 401(k). When the IRA or 401(k) owner passes away, the surviving spouse usually chooses to roll the decedent's IRA over into his or her IRA.

Assume that Harry Smith is the IRA owner and he passes away with Helen Smith as his designated beneficiary. Helen is age 68 when Harry passes away and she rolls over the IRA into her plan.

When Helen reaches age 72, she must start taking required minimum distributions. The initial minimum distribution must be taken by April 1 of the next year and is just under 4%. Her distribution will steadily increase as she becomes more senior.

Because Helen rolled over Harry's IRA into her IRA, she qualifies for the lower required minimum distributions under the uniform table. Helen often selects children or charities as designated beneficiaries.

If you are in a community property state and plan to leave your IRA to a trust or other beneficiary that is not your spouse, then it is essential to obtain a written consent from your spouse. In many states, attorneys who prepare estate plans will frequently use a waiver if the spouse is not the designated beneficiary of an IRA.

2. Children


For a surviving spouse or single person, an IRA or 401(k) may be transferred to children, nephews, nieces, other heirs or charity. Each child or other heir may take distributions for a period of up to ten years. With the exception of a spouse, a minor child, a child with a disability or chronic illness or an heir who is less than ten years younger than the IRA owner, the full IRA must be distributed within ten years of the death of the IRA owner.

Prior to 2020, a child was able to "stretch" the IRA payout over his or her life expectancy. A 60-year-old child of the IRA owner would have been able to start distributions at age 61 at approximately 4% and stretch those payouts over 26 years. Now, a child or other heir of the IRA owner must take all distributions within ten years. A child may choose to wait and take the full payout in the tenth year, but that may greatly increase the tax rate paid on the IRA.

Unfortunately, with many children the ten-year stretch plan will not be successful. CPAs report to the author that approximately one-half of children choose to take the traditional IRA distribution early, even though that means paying the income tax earlier and losing the benefit of the tax-free growth over the maximum distribution period.

3. Charity


For the IRA or 401(k) owner, the qualified plan is a wonderful benefit and a very good asset. However, when the owner passes away, a traditional IRA or 401(k) is often transferred to children with a large "you owe the IRS" tax bill attached (with the exception of a Roth IRA, which is income tax-free). For the vast majority of qualified plans, the child will pay income tax. Worse yet, the IRA or 401(k) distributions may even push the child into a higher tax bracket.

With income tax on the traditional IRA or 401(k) and no income tax paid on the home, land or stocks, the IRA or 401(k) is a less desirable asset for children. In fact, many heirs consider this a "bad asset" because of the income tax on most IRA payouts to children.

For this reason, children would prefer to receive a home, land or stock because there is no income tax bill attached. The wise planning decision is to transfer the home, stocks or land (the good assets) to children and save all the IRA income tax by transferring it to charity.

Because charities are tax exempt, there is no payment of income tax or estate tax on a traditional IRA or 401(k). The charity receives the full value tax free. By transferring the IRA or 401(k) to charity, it is possible to turn a bad asset into a good asset.

4. "Give It Twice" Trust


What plan could protect children from spending the IRA amounts and paying maximum income tax? Could a plan combine the tax-saving benefits of a stretch IRA with a term-of-years or life payout to children or other heirs? Could this plan also have the tax-free growth benefit of a stretch IRA?

A wonderful solution is an IRA to testamentary unitrust plan, which includes all of these benefits. A single person or surviving spouse may create an unfunded lifetime unitrust or testamentary unitrust in a will or living trust. The IRA beneficiary designation is to the trustee of that unitrust.

When the IRA owner passes away, the unitrust is funded with the traditional IRA. Because the unitrust is tax-exempt, there is a bypass of the income tax on the traditional IRA and any future growth. The children or other heirs receive new taxable income from the trust investments. The 5% unitrust payouts may last for a term of 20 years or for their lifetimes.

A very good plan for parents who have made lifetime gifts to charity is to combine a benefit to children with a future benefit to charity. This plan is called a "Give It Twice" trust.

For example, Mary Smith had an $800,000 estate. She lived in a home worth $200,000, had a CD for $200,000 and $400,000 in her traditional IRA. Her IRA was substantial because when her husband Bill passed away, she rolled over his IRA into her IRA. The combined IRA is now half of her estate.

Mary has two children and decides to transfer the home and CDs to the children in equal shares when she passes away. They each receive $200,000 in value from the home and CDs with no income or estate tax.

After Mary passes away, the $400,000 IRA is transferred into a charitable remainder trust. It receives the IRA proceeds and invests the full $400,000. The trust pays 5%, which is divided between the two children for a term of 20 years. At the end of 20 years, the trust principal plus growth is given to charity.

Mary was pleased with her plan because she had achieved several goals. First, she provided both principal and income to her children. This is a very good plan because some children will benefit from a period of time to improve their money management skills. Second, she saved all of the income tax on the traditional IRA. Because the unitrust is tax exempt, it receives the entire IRA tax free. The trust earns income for the children for a term of 20 years and is then transferred tax free to charity.

Because the trust benefits the children with more than $400,000 in income and then is given to charity, it truly may be called a "Give It Twice" trust.

5. Trust for Spouse and Children


For individuals with larger estates, it may make good sense to create a trust for surviving spouse and then a term of years for children. After the first person passes away, the IRA is transferred into the trust for the surviving spouse. The trust will distribute income for his or her lifetime and then to the children for a term of 20 years. Following the life of the spouse plus 20 years for the children, the trust remainder is distributed to charity.

This trust has several benefits. First, it may save very large income taxes because the trust is tax exempt. Second, the trust can be a "net plus makeup" plan that allows the spouse to choose to save taxes by taking reduced income during life. This will allow the trust principal to continue to grow and build up the trust so there is greater income to the children.

This plan is an excellent way to benefit the surviving spouse, children and charity.

Financial Assistance for Aging-in-Place Improvements

Do you know of any financial assistance programs that can help seniors with home improvement projects? I would like to help my grandparents make a few modifications to their house so they can continue living there safely, but they live on a fixed income.

There are a number of financial aid programs available that can help seniors with home modifications and improvement projects for aging-in-place, but what may be available to your grandparents will depend on their financial situation and where they live. Here are some different options to explore.

Medicare Advantage benefits: While original Medicare does not typically pay for home improvements, if your grandparents are enrolled in a Medicare Advantage (Part C) plan, it may offer some aid for modifications based on need. Contact their Medicare Advantage provider to see if this is available.

Medicaid waivers: If your grandparents are low-income and eligible for Medicaid, most states have Medicaid Home and Community Based Services waivers that provide financial assistance to help seniors avoid nursing homes and remain living at home. Each state has different waivers, eligibility requirements and benefits. Contact your Medicaid office or visit Medicaid.gov for more information.

Government assistance: Many state governments and several agencies within the federal government have programs that help low to moderate income seniors who are not eligible for Medicaid with home modifications. For example, the Department of Housing and Urban Development (HUD) offers HUD Home Improvement Loans by private lenders. Contact a HUD approved counseling agency. You can call 800-569-4287 or visit hud.gov/i_want_to/talk_to_a_housing_counselor to learn more.

The U.S. Department of Agriculture has a Rural Development program that provides grants and loans to rural homeowners. Contact your local USDA service center or visit offices.sc.egov.usda.gov for more information.

Many states also have financial assistance programs known as nursing home diversion programs. These programs, which may include grants or loans or a combination, help pay for modifications that enable the elderly and disabled to remain living at home. Covered modifications typically include accessibility improvements like wheelchair ramps, handrails and grab bars.

To find out if there are programs in your grandparents' area, contact the city or county housing authority, the local Area Aging Agency (800-677-1116) or the state housing finance agency – see NCSHA.org/housing-help.

Veteran benefits: If either of your grandparents is a veteran with a disability, the VA provides grants like the Specially Adapted Housing (SAH), Special Housing Adaptation (SHA) and Home Improvements and Structural Alterations (HISA) grants that will pay for home modifications. Visit Benefits.va.gov/benefits/factsheets/homeloans/sahfactsheet.pdf for details and eligibility requirements.

Some other VA programs to inquire about are the "Veteran-Directed Care" program and "Aid and Attendance or Housebound Benefits." Both programs provide monthly financial benefits to eligible veterans that can help pay for home modifications. To learn more, visit VA.gov/geriatrics or call 800-827-1000.

Nonprofit organizations: Depending on where your grandparents live, they may also be able to get assistance in the form of financial aid or volunteer labor to help with modifications. You should check with local nonprofit organizations to see if they offer programs in your grandparents' area.

Another option is a community building project that may provide volunteer labor to help seniors with home improvements. To search for projects in your grandparents' area, do a search online with the phrase "community building project" followed by their "city and state."

Reverse mortgage: Available to seniors age 62 and older who own their own home and are currently living there, a reverse mortgage will let your grandparents convert part of the equity in their home into cash that can be used for home improvements. A reverse mortgage does not have to be paid back as long as they live there. Note that a reverse mortgage may impact the ability of the heirs to inherit the home. Use caution because reverse mortgages are expensive loans, so this should be a last resort.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

 

Published October 15, 2021

IRA Charitable Rollover

 

The IRA charitable rollover was created in 2006 and made permanent by Congress in 2015. This giving plan is available for IRA owners who are over age 70½. It is a direct transfer from an IRA to a public charity. Prior to the IRA charitable rollover, some individuals would take withdrawals from their IRAs, report the distribution as taxable income, make a cash gift to charity, obtain the required receipts for charitable gifts over $250 and take a deduction on their tax returns.

Not only was this process rather cumbersome, it also resulted in increased adjusted gross income. With higher income, you may pay more income tax on Social Security or pay a higher Medicare Part B premium. That's why an IRA charitable rollover may be a great option.

The IRA charitable rollover is very simple. An IRA owner who has reached the age of 70½ may transfer up to $100,000 per year. The transfer is made directly from the IRA to a qualified public charity. The IRA rollover is not taxable on your income tax return, so there is no need for a tax deduction. It is a simple and effective way to make a charitable gift.

Mary Makes a Convenient Gift


Mary Smith is a retired teacher who recently turned 72. She regularly volunteers for her favorite charity and makes a gift each year of $2,000. Last year, Mary withdrew $2,000 from her IRA, reported that amount in her taxable income and then wrote a check to charity. Because the gift was over $250, the charity sent Mary a receipt. She deducted the $2,000 charitable gift on her tax return.

Mary heard from a friend about the IRA rollover option. She called the development director at the charity and asked about using an IRA rollover to make her annual gift. Mary would simply need to contact her IRA custodian and have the IRA gift transferred to her favorite charity.

Mary contacted the large financial company that managed her IRA and filled out a distribution form. She asked that the financial company make a "qualified charitable distribution" of $2,000 to her favorite charity. The financial company then transferred the $2,000 directly to her favorite charity. The balance of her required minimum distribution for that year was distributed to Mary. She reported her IRA distribution on her tax return, but did not pay tax on the $2,000 gift to charity.

Mary loved the simplicity of the IRA charitable rollover. The $2,000 gift to charity was not taxed on her income tax return and she did not have to itemize to take the deduction. The simplicity and convenience of this gift was a wonderful benefit for Mary.

Judy Takes the Standard Deduction


Judy is a retired nurse and a volunteer for her favorite charity. During her working years, Judy had sufficient income and lived a moderate lifestyle. She saved regularly and contributed to her IRA. With good investments and tax-free growth, Judy's retirement plan has increased to over $435,000.

Judy is now age 78, owns her home and has more income than she needs. Each year she makes a gift of $1,000 to charity. Because she does not report home mortgage interest or have enough other deductions to itemize, Judy takes the standard deduction. But she has heard about the IRA charitable rollover and wonders if that will be a good option. She asked her best friend, "Do you think that I should give the $1,000 from my IRA?"

Each year Judy withdraws the $1,000 from her IRA. It increases her income by $1,000. Because she gives the $1,000 to charity and takes the standard deduction, Judy does not reduce her income taxes with her charitable gift. The $1,000 IRA withdrawal increases her income, but Judy does not benefit from a charitable deduction.

A better plan is for Judy to gift the $1,000 directly from her IRA to charity. The IRA charitable rollover reduces her income by $1,000 and saves taxes.

Judy was pleased to learn that she could roll over $1,000 from her IRA to her favorite charity. Best of all, Judy was able to make the gift and reduce her current taxes. Judy spoke with her best friend and noted, "An IRA charitable rollover is a great plan. I helped those in need through my favorite charity and also lowered my taxes!"

Bruce is a Very Generous Donor


Bruce retired several years ago, but remained active during his retirement years. Recently, Bruce started volunteering with a local charity. He devotes several hours a week to his volunteer work and receives great satisfaction through helping others.

Since Bruce lives fairly moderately and has good income from his retirement plan and investments, he is a very generous donor. In fact, Bruce donates 60% of his income each year and lives on the balance. He feels that this is an opportunity for him to "give back" to society for the good life he has been able to lead. But Bruce would like to do more. Is there a way for Bruce to help even more?

The charity has a special project underway. Bruce understands the importance of this charitable project and would like to make an additional gift of $20,000. He checked with his CPA, who explained that he qualifies for a tax-free IRA charitable rollover. As a result, Bruce was able to contact his IRA custodian and have a gift of $20,000 sent to the charity. The charity honored Bruce for his generous gift. Bruce is happy with his rollover gift. It was not included in his taxable income and he was able to deduct his regular charitable gifts.

Bruce noted, "I am very pleased with my IRA gift. Because it was not included in my income, I am able to deduct my regular gifts and still help with an added gift of $20,000!"

Claire Simplifies Her Taxes


Claire is a retired investment advisor. Over the years, she watched her IRA blossom and grow into the largest asset in her estate. When she reached age 72, she started taking her required minimum distributions. Based on her age of 78 and the increased IRA value, her required distribution this year is nearly $100,000!

Claire is a frequent volunteer for her favorite charity and wants to make a major gift to a special project. In November, she decided that she had sufficient other income and did not actually need the IRA distribution for this year. With the growth of her IRA, it was logical to make the charitable gift from her IRA. But how can this work? Is this a good tax planning strategy?

Claire contacted her CPA Susan to discuss the best way to make her major gift. Susan explained to Claire the benefits of making a tax-free IRA charitable rollover. By not taking the $100,000 into her income, Claire will benefit in several ways. Her income will be lower and she will not have other tax benefits phased out. She will have a reduced income level and pay a lower Medicare Part B premium.

Claire responded, "I don't understand all of that tax talk, but it does make sense that with $100,000 less in taxable income, my return will be easier to complete. Plus, there are those other savings that you mentioned. This sounds like a great idea!'

The next day, Claire contacted her IRA custodian and had the full $100,000 IRA distribution sent to her favorite charity. She and her CPA Susan were both delighted. Claire made a wonderful gift and her tax situation was simplified.

How to Give From an IRA


The IRA rollover will require a payment by your IRA custodian to a qualified public charity. IRA custodians are generally familiar with the IRA charitable rollover.

Your first step is to contact the IRA custodian. Most IRA custodians have a standard IRA distribution form. Some IRA custodians have added the IRA charitable rollover as an option to this form. As the IRA owner, you will need to sign the application and indicate the amount of the gift and the correct legal name, city and state of the public charity.

After your IRA custodian has received the form and processed the transfer, it will pay the specified amount to the public charity. This gift can be made for a specific purpose. For example, the gift could be to a specific relief fund, to a scholarship fund or to another "field of interest fund" with a charity. If you have a specific goal for your IRA charitable gift, you will want to contact the charity to confirm the gift will be used for that purpose.

How to Find a Better Medicare Prescription Drug Plan

My pharmacist highly recommends that I compare Medicare Part D prescription drug plans each year, but it is such a hassle sorting through all those different plans. Is there an easier way to shop and compare Medicare drug plans?

Because Medicare's prescription drug plans can change their costs and benefits from year-to-year, comparing Part D plans every year during the open enrollment season from October 15 - December 7 is always a smart idea.

Even if you are happy with your current coverage, there may be other plans out there that offer better coverage at a lower cost. You never know until you look. Here are some tips to help you shop and compare Medicare drug plans.

Medicare Online


If you have internet access and are comfortable using a computer, you can easily shop for and compare all Medicare drug plans in your area and enroll in a new plan online if you choose. It only takes a few minutes.

Use Medicare's Plan Finder Tool at Medicare.gov/find-a-plan and choose your preferred type of coverage. Enter your ZIP code and financial assistance (if you receive any), select the drugs you take and their dosages, and choose the pharmacies you use. The plan finder does the math to identify the plans in your area that cover your drugs at the lowest cost.

This tool also provides a five-star rating system that evaluates each plan based on past customer service records and suggests generic or older brand name drugs that can reduce your costs.

When you are comparing drug plans, look at the estimated drug costs plus the premium costs. This shows how much you can expect to pay over a year in total out-of-pocket costs.

Be sure the plan you are considering covers all the drugs you take with no restrictions. Most drug plans today place the drugs they cover into price tiers. A drug placed in a higher tier may require you to get prior authorization or try another medication first before you can use it.

Any changes to coverage you make will take effect Jan. 1, 2022. If you take no action during open enrollment, your current coverage will continue next year.

Need Some Help?


If you need some help choosing a new plan, you can call Medicare at 800-633-4227 and they can help you out over the phone. You can also contact your State Health Insurance Assistance Program (SHIP) for free Medicare counseling. Typically, each SHIP conducts seminars during the open enrollment period at various locations throughout each state. To find a local SHIP counselor see ShiptaCenter.org or call 877-839-2675.

Financial Assistance


Individuals who are having a hard time paying medication costs may be eligible for Medicare's "Extra Help" program. This is a federal low-income subsidy that helps pay Part D premiums, deductibles and copayments.

To be eligible, your income must be under $19,320 for individuals or $26,130 for married couples living together, and your assets (not counting your home, personal possessions, vehicles, life insurance policies or burial fund) must be below $14,790 for individuals or $29,520 for married couples. For more information or to apply, call Social Security at 800-772-1213 or visit SSA.gov/extrahelp.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

 

Published October 8, 2021

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