Do you have an IRA? Do you love this community?
Consider making a charitable gift from your IRA
In December 2015, federal legislation was passed that allows for tax-free IRA transfers of up to $100,000 annually to nonprofits, provided that the donor is age 70 1/2 or older. Transferred funds go directly from the IRA account to the nonprofit and are not included in Adjusted Gross Income (AGI).
Your retirement funds can go further.
IRA transfers, known as Qualified Charitable Distributions (QCDs), to the Community Foundation (CFHZ) are tax-free for those age 70 1 ⁄ 2 or older, per legislation that was made permanent at the end of 2015. This offers the opportunity to give back without suffering adverse tax consequences.
This opportunity is of particular value to those who have required minimum distributions (RMDs) on their IRAs, those who do not itemize charitable deductions, and those who live in a state like Michigan that has a state income tax, because the funds go directly from the IRA account to the community foundation and are not included in your Adjusted Gross Income (AGI). This strategy can lower your taxable income and may decrease the tax you pay on Social Security Income.
Up to $100,000 can be transferred, free of income tax, each year from an individual retirement account (IRA) into a charitable fund at CFHZ. If married, your spouse can also transfer up to $100,000 from an IRA. By making the gift now, you can avoid future estate and income taxes.
CFHZ can help you achieve your charitable goals.
Your gift can create or contribute to a Community’s Endowment fund (unrestricted and/or field of interest funds), a Nonprofit Endowment fund, or a Scholarship fund. In addition to these gifts being tax-exempt, the gift can be used to satisfy all or part of an annual required minimum distribution.
Note: Donor advised funds do not currently qualify for a tax-free IRA transfer.
If you are thinking about making an IRA gift to multiple nonprofits, CFHZ can help make that giving easy. You can pre-determine the nonprofits you’d like to give to, and make just one gift from your IRA to CFHZ. We will then distribute your gift to your selected nonprofits, creating efficiency for you and your IRA administrator.
How do I make a qualified charitable distribution to CFHZ?
Simply instruct your financial institution or IRA trustee to make the distribution directly to the Community Foundation. Contact us to discuss whether you’d like to start a new fund or contribute to an existing fund. You can do so in your name, the name of a loved one, or anonymously.
Professional Advisor Perspective
“This is truly a “win-win” for the Community Foundation of Holland/Zeeland and IRA investors. With the certainty that the QCD is now permanent, we are able to utilize this as a valuable planning tool providing individuals with a dual opportunity to achieve their philanthropic goals and reduce their tax bill with their gift.” - Carla Masselink, Senior Vice President, Investments at MKS Wealth Advisors of Raymond James
“My clients have been able to satisfy their IRS required minimum distribution, reduce taxable income and enjoy the satisfaction of contributing to a worthy cause by donating directly from their IRA to charity. Now, with the recent legislation making this a permanent provision, we can help them create a more predictable gifting strategy for the future.” - Paul Brandt, Assistant Vice President, Trust Officer at Fifth Third Bank, Western Michigan Private Bank Team
To learn more, contact us at firstname.lastname@example.org
Featured in the Community Foundation’s Spring 2016 Newsletter. While this was written by Communications Manager Nicole Paquette in 2016, we believe that raising awareness of giving opportunities is timeless and always relevant.