One of the most important things we can provide our fundholders and our professional advisor partners is a commitment to sharing ways to give smarter and more tax-efficiently, especially as lives and circumstances change.
Qualified Charitable Distributions (QCDs), also called “IRA charitable distributions” or “IRA charitable rollovers,” are an increasingly popular and flexible tool for driving impact. If you are 70½ years old or older you can donate up to $105,000 directly from your traditional IRA to qualified nonprofits instead of taking the income. (Note, you cannot donate QCDs to your donor-advised fund)
If you are 70½ years old or older you can donate up to $105,000 directly from your traditional IRA to qualified nonprofits instead of taking the income.
One reason this option is so valuable is because these gifts can satisfy the required minimum distribution (RMD) amounts if you have passed your RMD required start date. This means you pay no income taxes on the gift, as the transfer generates neither taxable income nor a tax deduction. You benefit even if you don’t itemize!
Many people are unaware that once you pass the RMD start date, you must take the income, even if you don’t want or need the funds. So, this gives you flexibility in how you can use those funds.
You can use QCDs to support a variety of other funds at The Denver Foundation, including the Fund for Denver. The Fund for Denver is our permanent endowment that supports impactful work in the community, forever. QCDs can support designated funds, field-of-interest funds, and scholarships; however, donor-advised funds are not eligible to receive direct QCDs.
Charitable Gift Annuities (CGAs) are another philanthropic planning tool that you may wish to consider. Although CGAs are not new, they are particularly attractive for a number of reasons. A CGA is essentially a contract between you and your charity of choice. You make a gift to the charity, and then become eligible for a tax deduction on part of that gift. What makes it unique is that you also receive a lifelong stream of income from that charity.
CGA’s are more valuable today than they have been in the past. The suggested annuity rates have increased three times in the last 18 months, and are now higher than they’ve been in 16 years.
Also, the Applicable Federal Rate (AFR) remains high, which means that you can secure larger tax deductions when creating a CGA than you could for much of the last decade. In 2024, you may contribute $53,000 from your IRA into an income-producing gift, such as a Charitable Gift Annuity (CGA) or Charitable Remainder Trust, which can amplify your impact.
To learn more about how you can benefit from these tax-advantaged giving methods or to request a free-no obligation illustration of the benefits of these gifts, please get in touch with Rachel Spory-Leek, senior gift planning officer, at rsleek@denverfoundation.org, or 303.300.1790. You can also visit our estate and planned giving page to learn more.