Gifts & Wills
New Law and what you need to know about qualified charitable distributions…
Protecting Americans from Tax Hikes Act of 2015 was signed by President Obama on December 18, 2015. One of its provisions makes qualified charitable distributions (QCDs) permanent. QCD provisions: IRA owners and beneficiaries who are age 70½ or older can take advantage of this opportunity. You may distribute up to $100,000 per year directly from your Traditional IRA to a 501(c)3 nonprofit with no federal tax consequences. Gifts made to grant making foundations, donor advised funds, or charitable gift annuities are excluded from these rules. QCDs may satisfy all or part of your Required Minimum Distribution (RMD) or exceed it.
- QCDs are IRA distributions that would otherwise be taxable; therefore, Roth IRA distributions may or may not qualify. However, QCDs are not included in your Adjusted Gross Income (AGI), so using this strategy can lower your income and may possibly decrease the tax you pay on your Social Security income. This may also have a positive effect on your taxes with regard to deductions, exemptions, and tax credits. Check with your tax advisor to determine how lowering your AGI may benefit you.
- Although you cannot take a charitable deduction for a QCD, reducing your AGI may provide a better tax benefit. If you normally make donations to charities anyway, you may now want to consider making those donations from your IRA.
- QCDs are generally not available from SEP or SIMPLE IRAs where contributions are still being made.
- Remember that the financial institution will need to make the check payable directly from your IRA to a qualifying charity to have this strategy work for you. You may want to mail the check to the charity yourself, instead of the IRA custodian mailing it, to ensure that the charity acknowledges the gift is from you.
- QCDs require no special reporting by your IRA custodian; you will receive an IRS form 1099-R for the distribution. Please provide this form to your tax advisor during tax preparation time.
To complete a QCD from an IRA to a charity, the IRA owner must:
- Already be age 70 ½ on the date of distribution
- Submit a distribution form to the IRA custodian, requesting that the check be made payable directly to the charity
- Ensure that no tax withholding is being done from the QCD to the charity (as the money must actually go to the charity to qualify, and as a non-taxable distribution no withholding should be necessary)
- Send the check directly to the charity, or to the IRA owner to be forwarded along to the charity
While the process of completing a QCD to a charity is fairly straightforward, the key administrative requirement is that the distribution check must be made payable directly to the charitable entity. If the funds go to the IRA owner and are then passed along to the charity, it is still a taxable distribution to the IRA owner and not a QCD.Under IRS Notice 2007-7, Q&A-41, it is permitted for the check to be mailed to the IRA owner, as long as the check is payable to the charity, but a check payable to the IRA owner that is merely endorsed over to the charity does not satisfy the QCD requirements.In prior years, the rules that permitted QCDs required reauthorization from Congress each year, and those decisions were sometimes made late in the calendar year. With passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015, the QCD provision is now a permanent part of the Internal Revenue Code. This means you can plan your charitable giving and begin reviewing your tax situation earlier each year.
Any questions should be referred to your tax professional.
“As Christian stewards, we receive God’s gifts gratefully, cultivate them responsibly, share them lovingly in justice with others, and return them with increase to the Lord.”
Each generation of Catholics is given an important mission: how do we pass on the faith to the next generation? Foremost is evangelization – knowing our faith well and sharing it with others. As important, is the careful and prayerful sharing of our God-given resources. One of those resources – our assets – includes the things we have accumulated over our lifetime.
As Catholic Christians, we believe that our assets and our ability to accumulate them are gifts from a loving, generous God. We have a responsibility to use these gifts wisely and prudently – as well as to share them with others – our family certainly, but also with those institutions devoted to spreading God’s reign on earth.
Bequests in a will, charitable gift annuities, trusts, insurance and gifts of appreciated stock are all planned gifts, or gifts that come after much thought and consultation with professional advisors. These important gifts will ensure that our lives will touch the lives that come after us to build the faith for generations to come.
– Parish Guide to Planned Giving
– Planned Giving Brochure
Diocesan Gift Acceptance Policy (2002)
It is estimated that more than 50 percent of Americans do not have a Will. A Will allows you to control how your loved ones are provided for after your death; it can also create a lasting legacy of giving to your Church.
The easiest way to make a planned gift is to include a simple bequest in your Will. If you already have a Will, please take time to review it to ensure it meets your present needs, and fulfills your wishes. At any time a codicil allows for an added provision or changes to the terms of the Will.
Your bequest to St. Maximilian Kolbe Parish may be expressed
in these words:
I give and bequeath the sum of $_______ to (St. Maximilian Kolbe Catholic Church Society of Wayne County) for its general purposes (unrestricted) or for a specific named program (restricted).
I give and bequeath ___________% of the remainder of my estate after all debts, taxes, expenses and family bequests have been paid to (Parish Name) for its general purposes (unrestricted) or for a specific named program (restricted).
Other Ways for Individuals to Give through Estate Planning
|TYPE OF GIFT||BENEFIT TO PARISH||BENEFIT TO DONOR|
|Bequest in a Will||Bequest could be held in perpetuity and
invested to fund special needs.
|• Possible estate-tax deduction.
• Perpetual-gift opportunity.
|Charitable Gift Annuity||Assets that are not used in paying annuity
to the donors or other benefit the parish.
|• Guaranteed fixed income
• Portion of income is tax free.
• Deferred tax deductions.
|Insurance Policy||The parish received full face value of
policy upon death of the donor, or may receive
certain surrender value prior to donor’s death.
|• Income-tax deduction for value
for the policy when transferred.
• Premium payments may be
deducted as gifts.
• Possible income-tax & estate-tax deductions.
|Charitable Remainder Trust||Upon the death of the donor last
surviving income beneficiary, the
remaining assets benefit the parish.
|• Variable or fixed income.
• Deferred income if desired.
• Possible income-tax and
|Charitable Lead Trust||Income for duration of trust helps meet
needs that exceed the capabilities of
|• At end of trust period, principal
returns to donor or
• Principal can pass to others
with little or no shrinkage.
• Possible income-tax and
|Retirement/IRA||Those 70½ or older can take advantage of this opportunity. You may distribute up to $100,000 per year directly from your Traditional IRA to a 501(c)3 nonprofit with no federal tax consequences, or can be made as a significant gift upon the death of the donor… which benefits the parish.||• Estate-tax and income-tax
savings for substantial portion
|Appreciated Stock||Shares will be sold; the full value of the
assets will fund parish needs
|• Avoidance of capital-gain tax.
• Income-tax deduction for full
market value on date of gift.