Did you know that you can get a significant tax benefit by donating to ADL? There are many ways that giving to ADL, or your favorite charity, can reduce your taxes while making a substantial impact.
This month we want to share information on giving from your IRA. You’ve probably seen the “buzz-words” and “TLAs” (Three Letter Acronyms!), but what do they mean? And how do they help a charity like ADL? Or you as a donor?
First of all, here are a few definitions:
- IRA – Individual Retirement Account (this can be in the form of a traditional IRA or 401K through a company). For purposes of this example, we are not discussing ROTH IRAs.
- QCD – Qualified Charitable Distribution
- RMD – Required Minimum Distribution
In order to make a QCD donation and receive a tax credit you must be 70 and a half or older. The donated amount (up to $100,000 per year) is excluded from your taxable income. This option for giving is available to those between 70 and a half and 72 years of age.
When you turn 72 years old, you are required to take distributions on an annual basis, hence the term RMD. Because the funds that went into the IRA were tax deferred at that time, when you take the distribution, you are taxed on that amount when they are withdrawn. To avoid the tax on the required amount or more (up to $100,000), the money may be distributed directly from your retirement account to a qualified charity like ADL, lowering your taxable income.
Obviously, you should discuss this with your financial and/or tax advisors. If you would like more information on making this type of gift to ADL, please contact Director of Development Susie Moss at mountainstates@adl.org. If you are already planning to make a QCD to ADL Mountain States in this way, please notify Susie. Sometimes funds are distributed from retirement accounts and sent to our New York offices without your names attached; we can better serve you in tracking your gift if you can give us advanced notice.