“If you have an IRA, you can make a gift into a QCD to satisfy your RMD – as long as you mind your Ps and Qs. Does that sound A-OK?”
HUH?!
It’s no secret that understanding the world of charitable giving can be confusing. With an abundance of acronyms, it can feel like you’re staring into a bowl of alphabet soup.
Not only can Everence® help you make sense of this “alphabet soup,” we can also help you grow your ability to make a world of difference through charitable planning tools that offer you advantages today and in the future.
Here’s a short guide to the “alphabet soup” of better giving:
IRS (Internal Revenue Service) – You pay your taxes to the IRS. Interestingly, the IRS allows you to reduce your tax bill when you make gifts to your favorite ministries and charities. If you can correctly navigate the IRS’s “alphabet soup,” you can direct your dollars to church and charity instead of the IRS.
IRA (Individual Retirement Account) – IRAs are tax-advantaged retirement savings accounts. They help you save more because contributions are not taxed when you make them. However, you will pay taxes when you make withdrawals. Because IRAs can have significant taxes due when funds are withdrawn, they are a popular account to make gifts from – both while you are living and through your will/estate gift planning.
DAF (Donor Advised Fund) – Both a checking and savings account for giving, donor advised funds have become very popular to maximize your income tax deductions by timing your giving to get the most tax savings. If you have stock that has risen in value, you can donate it and essentially “give away” the tax bill associated with your capital gains. When you do that, you’ll get a double benefit of avoiding taxes while also receiving a tax deduction for the full value of the stock.
RMD (Required Minimum Distribution) – You are required to start taking distributions from your retirement accounts in your early 70s, even if you don’t need the money for your living expenses. When you receive those RMDs, you must pay taxes on the distributions.
QCD (Qualified Charitable Distribution) – Are you currently required to take an RMD? Do you give regular gifts to your church or a charity? If you answered yes to both questions, a QCD is likely the best way for you to make your gifts. QCDs take the place of your RMD and, by directing them to church and charity, you’ll avoid paying any taxes. You can give more effectively with your retirement savings going tax-free directly to the charities that are important to you.
If it’s all still a little “soupy,” that’s OK. Everence is here to help. Reach out and we’ll connect you to a representative who can help you make an impact for generations to come.