How IRAs Can Help Broward During This Crisis And Beyond

May 22, 2020

At a time when many of your clients are looking for ways to help their community face an unprecedented crisis, IRAs offer a powerful way to make a bold impact.

Even after big changes to federal law this year, IRAs are still a great asset to fuel charitable giving. That’s because your clients can:

  • Make charitable contributions of up to $100,000 from their IRA annual distributions, without it affecting their taxable adjusted gross income.
  • Create a legacy of bold impact through their estate plan by making a charitable organization – that isn’t subject to income tax – the beneficiary of this highly taxable asset.

By doing so, your clients have an opportunity to boost their giving power without facing additional tax consequences. And their increased philanthropic muscle comes just when Broward needs more help to face the devastating consequences of the coronavirus, and whatever lies ahead.

For clients looking to fuel immediate crisis relief, qualified charitable distributions from their IRAs can help feed people in need, stabilize families facing unemployment, engage isolated seniors, boost online counseling for those struggling with anxiety and much more.

And your clients can also use their IRA distributions to sustain and grow support for the arts, the environment, animal welfare and other important issues – which could suffer from a drop in charitable support during an economic downturn.

When helping your clients consider how to use their IRAs for charitable giving, there are important changes to federal law to keep in mind.

Changes from the SECURE Act

The new SECURE Act, which took effect Jan.1, brought changes that make the use of IRAs for charitable giving even more attractive in some cases. Those changes include:

  • Required minimum distributions from an IRA will start at age 72 for the account owner, instead of 70½. (This is delayed a year by the CARES Act, passed in response to the coronavirus.) However, qualified charitable distributions (QCD) are still permitted at 70½.
  • Working people can now contribute to IRAs beyond age 70½. Deductible amounts that an IRA owner contributes will reduce, dollar-for-dollar, the amount of a QCD that can be excluded from the donor’s taxable income.
  • Inherited distributions from an IRA have to be taken within 10 years of the account owner’s death – ending the “stretch IRA” for most beneficiaries. (Exceptions include the surviving spouse, a minor child and a disabled beneficiary.)

With the federal government doing away with the tax benefits of a “stretch IRA,” your clients interested in charitable giving may want to consider using this highly taxable asset to boost their philanthropy – and use other assets to support their heirs. To do so, they can designate a nonprofit organization as the beneficiary of their IRA.

For clients who want to use their IRA for charitable giving and to provide ongoing income for their heirs, they could designate a charitable remainder annuity trust as their IRA beneficiary.  

The IRA could then be distributed into the trust, which would not be subject to income tax. The heir could become the beneficiary of the trust and then receive annual (taxable) distributions. When the beneficiary dies, the remainder of the trust then goes to a charitable organization. However, this may not be as attractive of an option, because of the recent historic lows in interest rates.

Maximizing Giving Power, Minimizing Tax Consequences

It’s important to remember that qualified charitable distributions from an IRA aren’t permitted to a private foundation or a donor-advised fund – whether it’s at the Community Foundation or a commercial financial institution.

To maximize the charitable giving from an IRA, the Community Foundation does offer several types of charitable Funds where tax benefits for an IRA distribution do apply. These charitable Funds include:

  • Unrestricted Endowed Fund for Broward: Your client helps tackle Broward’s big challenges today and those that emerge in the future. We deploy support from your client’s Fund where it can make the most impact in our community. This type of Fund offers the most flexibility in grantmaking.  
  • Field of Interest Fund for Broward: Your client’s Fund supports a particular issue (health, education, environment, arts, etc.) that’s close to their heart. During times of crisis and beyond, your client’s Fund can respond with help for our community that reflects your client’s values, passions and goals for that issue.  
  • Designated Fund: Allows your client to focus grantmaking to specific charitable organizations. Your client can be assured that their favorite organizations will have a permanent revenue stream to support their missions in good times and bad.

You know your clients. We know philanthropy. By working together, we can help your clients make a bold impact with their IRA – during this crisis and beyond.

To learn more about the benefits of using retirement assets for philanthropic purposes, contact Mark Kotler, Senior Director of Philanthropic Services, at 954-761-9503, ext. 130 or

Information about the SECURE Act provided by PG Calc Blog,

Professional Advisors Council

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