By: SPENCER G. NAUMAN, JR.
For those who are 70 ½ with charitable intent and extra money in their Individual Retirement Accounts (IRA), there is an easy way to establish or enlarge Funds at The Foundation for Enhancing Communities (TFEC). Such persons may direct their IRA trustee to transfer up to $100,000 during a calendar year to TFEC for that purpose. In addition, if married, both spouses can order transfers of up to $100,000 from their separate IRAs. The transfer is called a Qualified Charitable Donation (QCD).
For many possible donors, making a charitable gift is not as attractive as it once was because of the larger standard federal deduction amount, making taking that deduction a better federal tax result than itemizing tax-deductible items. A QCD is an alternative without tax consequences. The transfer is not taxable for federal or state income tax purposes and does not become part of adjusted gross income (AGI).
Unfortunately, a QCD is not deductible on IRS Form 1040, Schedule A, even if a taxpayer forgoes use of the standard deduction. However, it will count towards satisfaction of the required minimum deduction (RMD) from an IRA. Unfortunately, several types of funds at TFEC are prohibited from receiving QCDs by IRC Section 408(d)(8). They are donor advised funds, including committee advised funds where the donor reserves the right to select the committee and charitable remainder trusts. On the other hand, scholarship funds, restricted funds, agency funds and area-of-interest funds are all eligible recipients.
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We can help your clients give strategically, intentionally, purposefully and EASILY, while also helping them to maximize their tax savings. Give us a call at 717.236.5040 or email us at philanthropy@tfec.org.
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