Dec 28, 2023

How to Use Your Retirement Account to Make Gifts to Charity

As you embark on the golden years of retirement, you may find joy and purpose in giving back and empowering younger generations. Did you know that you can use your retirement accounts to make a positive impact through Lutheran Partners?

In this article, we'll explore the wonderful world of Qualified Charitable Distributions (QCDs) from your Individual Retirement Account (IRA) and discover how you can make a difference while enjoying the benefits of tax savings.

Understanding Qualified Charitable Distributions

Qualified Charitable Distributions, or QCDs, provide a unique opportunity for retirees to support their favorite charitable organizations, like LPGM, directly from their IRAs. QCDs allow individuals aged 70½ and older to transfer funds (up to $100,000 annually) from their IRAs to qualified charities without incurring income taxes on the distribution.

The Benefits of QCDs

  1. Tax Savings: One of the primary advantages of making charitable donations through QCDs is the potential for tax savings. By directing funds straight from your IRA to a charity, the distributed amount isn't counted as taxable income.
  2. Meeting Required Minimum Distributions (RMDs): For retirees who are required to take minimum distributions from their IRAs, QCDs can be an excellent way to satisfy this requirement while supporting charitable causes.
  3. Reducing Adjusted Gross Income (AGI): QCDs can lower your AGI, which may have positive effects on other aspects of your financial planning, such as reducing Medicare premiums or lowering the impact of the taxation of Social Security benefits.

How to Make a QCD

  1. Check Eligibility: Ensure that you are at least 70½ years old, as this is the age requirement for making QCDs.
  2. Choose a Qualified Charity: Confirm that your chosen charity is eligible to receive QCDs. Most public charities fall into this category, but private foundations and donor-advised funds may not. As a 501(c)(3) nonprofit organization, Lutheran Partners in Global Ministry is a qualified charity. 
  3. Contact Your IRA Administrator: Inform your IRA administrator of your intention to make a QCD. They can guide you through the process, including preparing the necessary paperwork.
  4. Complete the Transaction: Once the details are in order, your IRA administrator will send the funds directly to the chosen charity.

Tips for Making the Most of QCDs

  1. Keep Records: Maintain records of your QCD transactions for tax purposes.
  2. Stay Informed: Tax laws are subject to change, so it's always a good idea to stay informed about any updates that may affect QCD regulations.

Conclusion

Making charitable contributions through Qualified Charitable Distributions is a wonderful way to combine the joy of giving with the financial benefits of smart retirement planning. By using your retirement accounts to support causes close to your heart, you can leave a lasting impact while enjoying potential tax advantages. It's never too late to make a difference!

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About Lutheran Partners

Lutheran Partners in Global Ministry provides access to quality education for people at the margins–especially women and girls. We work together with global partners to listen, respond and bear witness to local needs and priorities.

 

What does this mean?

“I was hungry and you gave me food, I was thirsty and you gave me something to drink, I was a stranger and you welcomed me.”
—Matthew 25:35 (NRSVue)

All people are created and loved by God (Genesis 1-2). But too many have been pushed to the margins of society because of where they were born, to whom they were born, or because of who makes choices on their behalf. Education is one of the only things we can give someone that can never be taken away and, historically, women and girls been given the least access to education.

LPGM works with churches and community-based organization partners who are native to—or have a long history of living and working in—the communities we serve. These partners speak the local language(s), know the local values and customs, and work within their own systems to create lasting change.

We listen to these partners, respond to their needs, and bear witness to God's work in their lives.

What We Do Who We Are

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