Retirement Planning

Charitable Giving Through Your IRA

Are you at least 70 ½ years and interested in supporting the ministries and missions of Trinity United Methodist Church, while also lowering the income and taxes from your IRA withdrawals? Distributing funds directly from your retirement account may give you significant tax savings while accomplishing your generosity goals. A Qualified Charitable Distribution (QCD) is a gift made directly from an individual retirement account and can satisfy the Required Minimum Distribution (RMD).

 

Example

Mark is 72 and must take a Required Minimum Distribution from his IRA this year. He also would like to make a donation to his church. If Mark puts the distribution in his bank account, it will be considered income and taxed as such. Instead, Mark can direct his IRA manager to distribute the money directly to his church. This is considered a Qualified Charitable Distribution and will satisfy his RMD but also provide him tax savings.

 

QCD
Qualified Charitable Distribution

Money transferred directly from an IRA to a charity that satisfies the Required Minimum Distribution. You don’t pay taxes on the money (up to $100,000) you give directly to charity from your IRA. You may make a QCD beginning at age 70 ½. The contribution must be made by December 31 of the year the RMD is required.

 

RMD
Required Minimum Distribution

The amount you are required to withdraw annually from your retirement account at age 72 or older. Amounts distributed are considered taxable income and cannot be rolled into other tax-deferred accounts. If the RMD is not taken the IRS can impose a 50% penalty plus interest on the amount not distributed.

 

 Planned Giving: Leaving a Legacy

At any age, you may explore creative giving alternatives that can benefit you - the donor - as well as the recipient. Planned gifts can be made in life or after death and can support the missions and ministries of Trinity. Consult with your financial planner or estate attorney to discover the benefits of these types of gifts and if they may be right for your financial or estate plan.

 
 
 

Contact

Consult with your IRA Manager and tax preparer or CPA for your options.

To take the next step, please contact Stephanie Dyal, Director of Church Administration and Finance (sdyal@trinitygnv.org or 352-376-6615).

Common Terms and Definitions

  • This can be a quick and simple gift! Transfer stock or mutual funds to the church. The donor can avoid capital gains tax and may receive additional income tax deductions. The church sells shares tax-free.

  • Donations of property to the church provide an income tax deduction and avoidance of capital gains tax for the donor.

  • Make a gift that allows input on how funds will be distributed. Create an agreement where the recipient manages the assets, and you and/or family members advise regarding the charitable disbursements. This provides an income tax deduction to the donor.

  • Designate the ownership of your home to the church, but retain occupancy. This provides a charitable income tax deduction and continued use of your home.

  • The donor’s assets are put into a trust, and the donor remains in control during their lifetime. After death, the church becomes the trustee and makes distributions as directed by the donor. This may provide estate tax savings.

  • Bequest a gift to the church in your will. The gift can be a percentage of the estate or a specific dollar amount. Your estate will receive a tax deduction.

 

  • Designate the church as a beneficiary of your life insurance policy as a future gift to Trinity. The policy itself can also be donated.

 

Life Income Arrangements

  • This option allows you to place funds in an annuity that is managed by a charity. The charity pays you fixed payments for your lifetime and distributes the remainder to charitable beneficiaries. This provides income tax deductions plus fixed annuity payments for life. It also provides a future gift to the church

  • This is a trust that pays you a fixed income, and provides an income tax deduction as well as a future gift to the church.

  • This trust pays you a percentage of the assets, based on annual value. It provides income tax deduction as well as income for life.

  • This trust pays an income to the church for a set period of time, then passes to heirs. This can reduce the size of taxable estate.