Contributing from your IRA to a fund at the Wayne County Community Foundation (known as an “IRA Qualified Charitable Distribution” or “QCD” for short) is a great way to reduce your tax burden and make a significant gift to support local causes you care about.
In retirement, the IRS requires you to withdraw a certain amount (a “Required Minimum Distribution” or “RMD”) from your IRA each year whether you need the funds or not, and you must pay income tax on every distribution you take. If you are fortunate enough that you do not need all of the funds from your IRA, it is good to have a plan. You can utilize part of your RMD to direct a gift to benefit the causes of your choice.
Here’s How it Works:
If you are 70 1/2 or older*, you can make a gift from your IRA account to the Wayne County Community Foundation to benefit your favorite charitable cause. Gifts made from your IRA (up to $100,000 per year) do not have to be reported as taxable income and qualify toward your required minimum distribution which can lower your income and taxes. If you are married, your spouse can also make a gift of up to $100,000 from their IRA, for a total of $200,000.
Although Donor Advised Funds at the Wayne County Community Foundation are not eligible to receive QCDs per the IRS, the Foundation has several funds that qualify for this type of gift that donors can consider, including our General Fund, the Wayne Tomorrow! Fund, the First Responders Fund, the Emergency Food Relief Fund just to name a few. It can also be applied to nonprofit designated funds or given to support the Wayne County Community Foundation Paul Edwards scholarships.
For many of us, being generous with our money is one of the great joys in life. And it turns out that being generous with your IRA can be both personally satisfying while providing tax benefits. With an IRA Charitable Rollover, you reduce your taxes, support a fund to benefit one or more organizations you care about, and feel good knowing that you were able to make a major gift from your IRA.
*The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) became law on December 20, 2019. The Secure Act made major changes to the RMD rules. If you reach age 70 ½ in 2020 or later you must take your first RMD by April 1 of the year after you reach 72.
Note: Tax-free IRA contributions can be made to Field of Interest, Unrestricted, Designated, special funds, or operating funds at the Wayne County Community Foundation. Gifts to Donor Advised Funds, private foundations, or to fund a Charitable Gift Annuity or Charitable Remainder Trust do not qualify for preferential tax treatment. You cannot receive any goods or services in order for an IRA rollover gift to qualify for tax-free treatment.
This information is not a substitute for expert legal, tax, or other professional advice, and we strongly encourage donors to work with their professional advisor to determine the impact of making a QCD on their particular situations.