If you have a traditional IRA, you must take the required minimum distribution (RMD) when you reach age 72 in accordance with the new SECURE Act. (Additionally, those persons who began taking RMDs by April 1st of the year after they turned 70½ must continue to take RMDs on the current schedule.)
If you do not need the income the government is requiring you to take, consider making a charitable gift to the Valleys Planning Council using an IRA qualified charitable distribution (QCD). This is an excellent way to show your support for the VPC and receive tax benefits in return. Donors 70 ½ and older may also make QCD gifts as noted above.
You may donate up to $100,000 to the charity(s) of your choice through your IRA. Distributions must be made by your IRA administrator directly from a traditional IRA account to the Valleys Planning Council.
NOTE: Funds that are withdrawn by you and then contributed do NOT qualify as a qualified charitable distribution. Gifts from 401k, 403b, SEP and other plans also do NOT qualify. Gifts from your IRA must be outright, meaning they go directly to the Valleys Planning Council. Charitable contributions are limited to no more than 60% of adjusted gross income (AGI) during each tax year.
Traditional IRAs are tax-deferred; however, IRA owners pay federal income tax on any required minimum distribution. You may be able to avoid those taxes if you donate your RMD directly to a qualified charity, such as the VPC.
It is important to consider your financial and tax situation before deciding whether to make a charitable contribution from your IRA. You may qualify for a Medicare savings, with increased Social Security benefits, by naming the RMD as a qualified charitable distribution. Please confer with your attorney or financial/tax advisor to review your unique circumstances.
To initiate a charitable gift distribution from your IRA, contact your IRA administrator for the correct name and address to send your request.
NOTE: If you want your distribution credited toward the current tax year, it is critical that you make your request several weeks before the end of the year to ensure there is time for processing.
A Sample Letter
{Date}
{Name of IRA Provider}
{Address}
{City, Sate, Zip}
Re: Request for Qualified Charitable Distribution from Individual Retirement Account
Dear Sir or Madam:
Please accept this letter as my request to make a qualified charitable contribution from my Individual Retirement under Sec. 1201 of the Pension Protection Act of 2006 (the PPA) and Sec. 408(d)(8) of the Internal Revenue Code of 1986, and made permanent under the Consolidated Appropriations Act of 2016. My account number is [insert account number].
Please issue a check in the amount of $____________ payable to The Valleys Planning Council (Tax ID #52-6081610) at the following address:
The Valleys Planning Council
PO Box 5402
Towson, MD 21285
In your transmittal to the Valleys Planning Council, please state my name and address as the donor of record in connection with this transfer, and copy me on your transmittal.
It is my intention to have this transfer qualify during the 202X tax year. Therefore, it is imperative that this distribution be postmarked no later than December 31, 202X.
If you have any questions or concerns regarding this request, please contact me at {Phone and Email Address}.
Thank you for your prompt attention to and assistance with this matter.
Sincerely,
{Name and Signature of IRA Owner}
The above sample letter is offered as an aid and not intended as legal advice. Please confer with your attorney or financial/tax advisor when making a charitable gift distribution from your IRA.
Make the VPC a beneficiary of your IRA or other retirement account
Another way to show your support for the Valleys Planning Council is to designate your remaining retirement plan assets to the VPC. By naming the VPC as a recipient of some or all of your IRA, 401(k), 403(b) or other qualified plan, you can make a significant gift to the VPC after your passing (when you no longer require retirement income).
This approach enables you to continue to take regular withdrawals from your retirement account to support your needs, while maintaining the flexibility to change beneficiaries should your family’s needs change during your lifetime.
Naming the VPC as a qualified beneficiary for your retirement plan assets may have tax benefits for your estate and heirs.
When you designate the Valleys Planning Council as the beneficiary for all or part of your qualified retirement plan assets, those assets pass to the VPC free of any tax. However, when these assets are passed to your heirs (other than your surviving spouse), they are subject to federal income tax and may also be subject to federal estate tax (depending upon the value of your estate) as well as various state, income and inheritance taxes. Retirement plan assets can be an ideal choice for charitable gifts because they are taxed at ordinary income tax rates (not tax efficient) when they pass to heirs. Designating these funds to a charitable beneficiary like VPC ensures maximum tax efficiency in gifting.
To make the VPC a qualified beneficiary of your retirement plan, simply contact your IRA or retirement plan administrator and request a copy of the Change of Beneficiary Form. You can fill this in as you wish and include the Valleys Planning Council for a portion or all of the remainder of your plan’s assets.
As with all changes to your estate plans, contact your attorney or estate/tax advisor to review your personal circumstances.
Please do call the Valleys Planning Council at 410-337-6877 if you would like assistance with your planned giving.