The Eastern West Virginia Community Foundation (EWVCF) wants to remind our friends who are at least age 70½, that the US tax code allows funds to be transferred directly from their Traditional Individual Retirement Accountto a qualified charity. While this program has been around for a number of years, it was only made permanent beginning in 2016. Prior to that Congress often didn’t approve the qualified charitable distribution (QCD) until the very end of December so it was a bit more difficult for donors to plan ahead.
Although a QCD may not be made to a donor advised fund, virtually any other charitable fund held by the Community Foundation would qualify. In order to enjoy the tax advantages provided by this program, charitable contributions must be transferred directly from a Traditional IRA to the qualified charity. In fact, several long time donors make contributions to EWVCF from their IRA every year. Gifts of this kind allow the donor to support multiple charitable programs and offer several tax advantages.
Keep in mind that a 401(k), SEP-IRA, or SIMPLE IRA does not qualify, but assets from those can be rolled over to a Traditional IRA and then transferred to the Community Foundation. For example, a single individual with charitable intentions could arrange for a direct transfer of $110,000 from the IRA custodian (e.g., a trust bank or brokerage firm) to the Community Foundation or any qualified charity; the donor would never receive the funds. The maximum QCD allowed in any year is $100,000.
If you have questions about the tax ramifications and how the program might help you, the October 2016 issue of the American Association of Individual Investors (AAII) Journal has an excellent article about the tax advantages of using a QCD for charitable giving. http://www.aaii.com/journal/article/the-tax-advantages-of-qualified-charitable-distributions-from-iras.mobile
Of course you can always call Michael Whalton at 304.264.0353 or email us at the Community Foundation for more information.