Using Retirement Assets for Lifetime and Legacy Giving

Help your clients make an immediate impact or plan a legacy gift for the causes they care about most.

Retirement planning is a necessary element of a secure financial future. Individual retirement account (IRA) assets are integral to a good retirement strategy, and they are also among the most tax-efficient ways to make charitable gifts for your clients who have reached age 70 ½.  For clients who have accumulated assets beyond their retirement needs, there are multiple ways to avoid unintended tax consequences.

LIFETIME GIFTS

After age 59 ½, your clients can take a taxable distribution from their traditional IRA without penalty. They can use that in any way, including contributing the distribution to charity. If they itemize their charitable deductions, then donating their IRA distribution should provide a charitable deduction that offsets their income.

After reaching the age of 70 ½, individuals can make IRA distributions directly to charities, up to $100,000 per taxpayer, per year. These qualified charitable distributions (QCDs) provide several tax advantages:

>QCDs are excluded from taxable income. For those clients who do not itemize deductions, QCDs may provide greater tax savings than cash gifts.

> Beginning at age 72, QCDs count toward a client’s required minimum distribution (RMD).

CONSIDERATIONS FOR LIFETIME GIFTS

When making a QCD to the North Texas Community Foundation, it must be for a designated purpose. The Pension Protection Act of 2006, which created the QCD, specifically prohibits transfers to donor advised funds or to private foundations. NTCF will work with you and your client to create a designated fund to support specific nonprofits or to accept the donation as an investment in one of NTCF’s responsive grant cycles. Your clients may choose to endow a fund to champion their favorite causes forever.  

Lifetime donors get to enjoy the results of their generosity now.  

CREATING A LEGACY

Naming North Texas Community Foundation as the beneficiary of an IRA or other retirement account can be an effective way to minimize federal income and estate taxes. Because charities are tax exempt, there is no estate or income tax on the gift. This means the full amount of your client’s gift will directly benefit the cause(s) that are most important to them.

In contrast, retirement assets left directly to heirs are taxable as income in respect of a decedent (IRD). So, choosing assets that are non-taxable, such as life insurance proceeds for heirs, will maximize what they receive from the estate, or replace the IRA assets donated to charity.

As your partner, NTCF can help your clients craft a document that aligns their values with the specific organizations and causes they want their bequest to benefit.

We call our network of future-thinking individuals the Legacy Society. If a legacy plan with NTCF can be of service to your clients, we’re here to help.

Contact our Director of Charitable Gift Planning, Amanda Lewis, at connect@northtexascf.org to explore the possibilities.

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Together, we can cultivate a more vibrant and resilient community where all North Texans can thrive.