Charity and your IRA

This is a modified version of a column that was printed in the Oct 16 issue of the Delaware Business Times.

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Being generous with our money is one of the great joys in life. Whether we’re giving to help communities ravaged by natural disasters, local schoolchildren, for environmental cleanup, arts programs or any other passion, giving helps make our live complete.

And it turns out that being generous with our IRAs can be both personally satisfying, and provide tax benefits. This is even more important due to last year’s changes in federal tax law.

Many of us spend years contributing to retirement accounts, without digging into the details until it’s time for that money to come out. Some people even find they don’t end up needing the money as much as they thought they would. And they can be in a fix. Eventually we pay taxes on the money that accumulates in our IRAs.

If you’re fortunate enough that you don’t need all of that money, it’s good to have a plan. Here’s an idea.

When you reach the age – 70½ – where annual withdrawals are mandatory, you can reduce the impact on your taxes and also help worthwhile causes and organizations through a qualified charitable distribution, or QCD.

Best of all, QCDs can be made to almost any 501(c)(3) organization or house of worship, including the Delaware Community Foundation. IRS regulations permit QCDs into most types of nonprofit organizations – from programs serving children, to arts programs, environmental programs, senior centers, and so many more.

At the community foundation, while QCDs cannot be contributed to Donor Advised Funds, they can go into designated funds, which provide grants to specific charitable organizations; field of interest funds, which allow a donor to support a specific passion or interest; scholarship funds; or to the DCF’s Delaware Forever Fund, which was developed to address some of the community’s most pressing needs as they arise.

To read a longer piece, providing details about how this works, click here to read my recent op-ed in the Delaware Business Times.