Charitable donors in their seventies and older have an easy way to support their community and the causes they care about.
Tony Buschauer CPA shares how individuals over the age of 70 1/2 or older* can support Pasadena Community Foundation by contributing from their IRA with a Qualified Charitable Distribution (QCD). This is an easy way to reduce your tax burden and make a significant gift to support PCF’s grantmaking in impact areas that you care about. Tony is a partner at Gregory, Fillas & Buschauer LLP, where he specializes in meeting the tax and accounting needs of small businesses and their owners.
In retirement, the IRS requires you to withdraw a certain amount – your required minimum distribution (RMD) – each year whether you need the funds or not, and you pay income tax on every distribution. You can utilize your RMD to direct a gift to benefit charitable causes.
* 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 73.
How It Works
If you are over age 70 1/2, you can make a gift from your IRA account to benefit your favorite nonprofit. Gifts made from your IRA (up to $100,000 per year) are not reportable as taxable income and qualify toward your RMD. Doing so can help lower your income and taxes. If you are married, your spouse can also make a gift of up to $100,000 per year from his or her IRA, for a total of $200,000.
As such, our donors can give far more with less! This may be an attractive giving option for donors if they are over 70½ and they are interested in making a significant lifetime gift to support their community right now.
Benefits
The biggest advantage of using your IRA Qualified Charitable Distribution is that you can give far more with less. You reduce your taxes, support one or more organizations you care about, and feel good knowing that you were able to make a major gift from your IRA. Some examples when using an IRA rollover may be beneficial to the donor:
- IRA rollovers especially benefit the nearly 40% of Americans who do not itemize deductions and therefore do not receive a tax benefit for their charitable contributions.
- If charitable gifts already exceed 60% / 30% limits of anticipated adjusted gross income, this allows the donor to overcome these limits and give more.
By avoiding the recognition of taxable income, the donor may have less of their Social Security income subject to income tax. - May reduce required minimum distributions in future years by reducing the balance of the IRA.
Using your IRA Qualified Charitable Distribution to support the Pasadena Community Foundation
Your QCD can be given to the Pasadena Community Foundation to establish or benefit a variety of funds or causes, including Scholarship Funds, Designated Funds, Endowment Builder Funds, and PCF’s Friends & Fellows Fund, which supports PCF’s local grantmaking programs.
Gifts to donor advised funds, private foundations, or to fund a charitable gift annuity or charitable remainder trust do not qualify.
Interested in learning more? Reach out to Liz Algermissen, PCF’s Director of Development: (626) 796-2097, ext. 105 or ealgermissen@pasadenacf.org