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IRA Assets and Qualified Charitable Distributions

Jeff Wasser

IRA Assets and Qualified Charitable Distributions

BSBI’s Endowment Board of Trustees encourages charitable donations to the Endowment Funds. At this time I will review some of the benefits of gifting Qualified Charitable Distributions (QCDs) to the Endowment.

Donation of “Qualified Charitable Distributions” (QCD)

In legislation at year end 2016, Congress made permanent Qualified Charitable Distributions (QCDs) from individual retirement accounts.

What are QCDs?

A QCD permits annual direct transfers to a qualified charity (or charities) totaling up to $100,000 of tax-deferred IRA savings. QCDs offer advantages over taking a taxable IRA distribution and then contributing the proceeds of that distribution to a charity. That’s because taxable IRA distributions must be included in adjusted gross income. Importantly, QCDs automatically satisfy required minimum distributions (RMDs) for the year when the QCD is made. That’s a real advantage for a charitably minded IRA owner who doesn’t depend on some or all of the RMD for living expenses.

What are important things to know about QCDs?

Only individuals who’ve attained age 70 ½ may make QCDs. The charitable organization must be an organization that qualifies for a charitable income tax deduction of an individual. The Beth Sholom B’nai Israel Endowment qualifies as such an organization. The BSBI Endowment will be required to provide the same contribution acknowledgement to the owner of the IRA claiming a charitable tax deduction. Failure to obtain the acknowledgement will quash the QCD. QCDs may be made from any IRA or individual retirement annuity, but not from a simplified employee pension, a simple retirement account, or an inherited IRA. Among other benefits, the use of QCDs for charity may reduce taxable income, reduce state and federal tax, reduce taxation of social security, reduce supplemental IRMMA payments to Medicare parts B and D. Individuals and couples with low as well as high incomes may benefit by contributing QCDs to charity.

Examples of using QCDs for charitable giving

One example of optimizing the use of QCD is to establish a perpetual endowment fund. By making a QCD donation to the Endowment of BSBI the donor may create a $25,000 endowment for BSBI. This endowment may be given over the course of a number of years to reach the level necessary to provide perpetual support of a $1000 to Hineni. By adding to the donation annually the donor could reach a $45,000 over a number of years. This amount would support a perpetual Hineni donation at the $1800 per year level. Details of further possibilities and arrangements for payment can be obtained from the Endowment members or via email noted below.

For further information, contact a member of the Endowment Committee. You may reach out to the BSBI Endowment by e-mail at BSBIEndowment@myshul.org or directly to Roy Filkoff or Jeff Wasser. Remember to discuss this and all other tax matters with your tax advisor before taking any action.

Sat, July 2 2022 3 Tammuz 5782