PLANNED GIVING
Provide affordable housing, support and community to veterans throughout their lifespan.
There are many ways to help Wisconsin Veterans Village throughout your life. With a little planning, there are ways to support affordable housing for veterans and veteran families far into the future, too. As you’re considering your end-of-life planning, you may wish to include a planned gift to Wisconsin Veterans Village, such as a bequest, beneficiary designation, charitable remainder trust or charitable gift annuity.
Types of Planned Gifts
Choosing the right planned gift depends on your personal circumstances and financial goals. Your attorney or financial advisor can help you coordinate a planned gift to Wisconsin Veterans Village. We also would be happy to explain the many gift opportunities that can help you achieve your goals while helping to sustain the mission of Wisconsin Veterans Village.
- Bequest
- Life Insurance
- Retirement Asset
- Charitable Gift Annuity
- Charitable Trust
- Donor-Advised Fund
Frequently Asked Questions on RMD
Upon reaching the age of 73 years or older in taking the Required Minimum Distribution (RMD) out of your various Individual Retirement Accounts (IRA).
Have you thought about contributing the RMD, or a portion thereof, to a charitable organization (501c3) which will count toward the RMD?
Most people tithe to their church or other charitable organizations out of their paycheck, but you may also make those contributions using your IRA and not use the money you take home from your employer, or your retirement. If you have the opportunity to use the RMD instead of the other sources that I mentioned, you will free up your “operational” funds that are used for your daily expenses.
IMPORTANT: To do this, you must authorize your investment broker to transfer the funds DIRECTLY to the 501c3 entity without it passing through your hands.
If you take possession of that money and write a check to the charitable organization rather than making the donation through a direct contribution, you will be taxed on that money as income. But this MUST be coordinated through the financial entity that is making the contribution BEFORE it may be counted as part of your RMD.
You may not retroactively count it toward the RMD if you make the contribution without first coordinating it with your financial entity. THEY MUST BE AWARE OF YOUR INTENTIONS AT THE TIME OF THE CHARITABLE GIFT.
Also, contact the recipient of the charitable contribution when the donation is made to verify your identity as the donor and to obtain proof from the recipient organization that your gift is tax exempt. Not all brokerage firms include that information when the contribution is made.
You can schedule the charitable contributions to the various 501c3s on a regular basis, such as, once a week, monthly, annually, or make a one-time contribution by providing the name and address of where the donation is directed, and indicating it to the attention of the treasurer or financial officer of the 501c3 recipient. This tax-free contribution will count toward your mandatory annual RMD withdrawals. CHECK WITH YOUR FINANCIAL ADVISOR FOR MORE INFORMATION ON HOW TO DO THIS. This is a win-win for you and for your selected 501c3 charitable organization.
When planning your IRA withdrawal strategy, you may want to consider making charitable donations through a QCD.
Questions?
· A QCD is a direct transfer of funds from your IRA custodian, payable to a qualified charity. QCDs can be counted toward satisfying your required minimum distributions (RMDs) for the year, as long as certain rules are met.
· In addition to the benefits of giving to charity, a QCD excludes the amount donated from taxable income, which is unlike regular withdrawals from an IRA. Keeping your taxable income lower may reduce the impact to certain tax credits and deductions, including Social Security and Medicare.
· Also, QCDs do not require that you itemize, which due to the recent tax law changes, means you may decide to take advantage of the higher standard deduction, but still use a QCD for charitable giving.
While many IRAs are eligible for QCDs—Traditional, Rollover, Inherited, SEP (inactive plans only), and SIMPLE (inactive plans only) * —there are requirements:
· You must be 70½ or older to be eligible to make a QCD.
· QCDs are limited to the amount that would otherwise be taxed as ordinary income. This excludes non-deductible contributions.
· The maximum annual QCD amount is $105,000 (index adjusted annually). This applies to the sum of QCDs made to one or more charities in a calendar year. (If, however, you file taxes jointly, your spouse can also make a QCD from his or her own IRA within the same tax year for up to $105,000.)
· For a QCD to count towards your current year’s RMD, the funds must come out of your IRA by your RMD deadline, generally December 31.
· Contributing to an IRA may result in a reduction of the QCD amount you can deduct. (The aggregate amount of deductible IRA contributions you make to your IRA after you turn 70 1/2 will reduce the amount of the QCD that is not included in your gross income.)
· Any amount donated above your RMD does not count toward satisfying a future year’s RMD.
· Funds distributed directly to you, the IRA owner, and which you then give to charity do not qualify as a QCD.
· Under certain circumstances, a QCD may be made from a Roth IRA. Roth IRAs are not subject to RMDs during your lifetime, and distributions are generally tax-free. Consult a tax advisor to determine if making a QCD from a Roth is appropriate for your situation.
The charity must be a 501(c)(3) organization, eligible to receive tax-deductible contributions.
Some charities may not qualify for QCDs.
Consult a tax advisor or the charity for its applicability.
· Private foundations
· Supporting organizations: i.e., charities carrying out exempt purposes by supporting other exempt organizations, usually other public charities
· Donor-advised funds, which public charities manage on behalf of organizations, families, or individuals
· Beginning in 2023, a QCD may be taken to fund a Charitable Remainder Unitrust, Charitable Remainder Annuity Trust, or Charitable Gift Annuity up to a maximum one-time amount of $50,000.
Tax reporting
· A QCD is reported as a normal distribution on IRS Form 1099-R for any non-Inherited IRAs. For Inherited IRAs or Inherited Roth IRAs, the QCD will be reported as a death distribution. Itemization is not required to make a QCD. While the QCD amount is not taxed, you may not then claim the distribution as a charitable tax deduction.
· A QCD is not subject to withholding. State tax rules may vary, so for guidance, consult a tax advisor.
· When making a QCD, you must receive the same type of acknowledgement of the donation that you would need to claim a deduction for a charitable contribution.
· A tax advisor can help you determine if both your IRA and charity qualify for QCDs.
10 Things to consider if you use your RMD for a Qualified Charitable Donation:
Each person can donate the full amount of his or her RMD, up to a maximum of $100,000 annually. If you are a married couple filing jointly and you each have your own IRA, you both can use the $100,000 QCD rule.
You should work with your IRA custodian to correctly accomplish a QCD. Be careful not to withdraw the funds or deposit the RMD into your personal account and then write a personal check. The funds must be made payable directly from the IRA to the charity. (Some IRA custodians mail the check to the IRA owner; if that is the case for you, simply give the check to the charity.)
Be sure to inform your tax preparer that you did a QCD. Your IRA custodian will send you a 1099 showing that the distribution occurred, but the amount may not be clearly identified as a QCD. Be sure the QCD is correctly listed on your tax return or you will lose the tax break.
It is permissible to use less than the full RMD for the charitable distribution. So, for example, if you have an RMD of $6,000 and you want to give only $4,000 to charity, you still would need to withdraw the remaining $2,000 and pay taxes on it. (Taking the incorrect amount for your RMD could result in a hefty penalty.)
You can make a QCD that exceeds your RMD for a given year. However, that extra distribution cannot be carried over to meet the RMDs for future years.
You can distribute the money to multiple charities if you choose. The $100,000 per person limit applies to the sum of all QCDs taken from all your IRAs in the tax year. You can make one large contribution or several smaller contributions to one or more charities.
Donors cannot receive any benefit for making a qualified distribution to a charity. So, for example, you cannot use a QCD to purchase something at a charity auction or tickets to a charity event.
For a QCD to count toward your minimum annual IRA distribution, it must meet the same deadline as a normal distribution. (Usually Dec. 31.)
Not every organization or cause qualifies for a QCD. The organization must be a 501(c)(3). A QCD cannot be made to donor-advised fund sponsors, private foundations or supporting organizations. Before you arrange for the transfer of funds, be sure the charity is eligible.
The first dollar out of an IRA is considered to be the RMD. So, if you take money out early in the year, that distribution would count toward your RMD and you could potentially lose the tax benefit of the QCD. Say for example John, who is 75, takes his full RMD in February and deposits the funds into his bank account. In November, he wants to do a QCD. John cannot retroactively deem the February distribution to be a QCD. He must take an additional distribution if he still wishes to do a QCD for that calendar year. That income can be excluded, but it still will not offset the income from the RMD taken earlier in the year.
If you are already 73 but the QCD strategy is new to you, be sure to discuss your specific situation and any questions with a qualified tax professional.
If you have not turned 73 yet, it is still worth having a conversation about how to prepare to take advantage of this strategy in the future.
For those who are charitably inclined and will not be able to itemize their deductions, a QCD can be a win-win: You get to satisfy your RMD and exclude income from your AGI (Adjusted Gross Income), and the charity or charities that are important to you will continue to benefit from your generosity
A donor advised fund is my go-to charitable giving vehicle for many reasons, but there are a few other ways to gift to charities and do the best… for them and for you, too.
I will never forget the time I stepped down from a junior board position. It was a difficult decision, because I supported the charity’s mission. Yet fundraising was not my area of genius, and my time was better spent with family. Have you ever stepped away from a meaningful cause, instead opting to financially support their mission?
Your motives for giving may differ from mine, but you care deeply about using your gifts to benefit others. Below are five ways to maximize your financial charitable contributions.
1. Make non-cash gifts (including stock) part of your giving plan
Cash gifts are great and can be helpful to non-profits. However, there are other non-cash methods to benefit charities. You have probably donated household items and clothing to charities in the past. However, are you keeping a detailed list of the items being donated, their thrift shops fair market value, the original purchase price, and the donation date? If not, you are overlooking important tax documentation (consult IRS Publication 526 for details).
2. Create impact with your contributions
You likely have a big heart and want to give to several different causes. Yet, there are so many valuable causes in the world. Your contribution will go further if you select a few causes and give meaningfully to them. Consider consulting Charity Navigator for independent rankings on the non-profit’s level of transparency and accountability.
Your time is more valuable than writing 50 different $100 checks and tracking them for income tax purposes. Furthermore, you can get more involved with the charity’s mission and perhaps serve on the board. You will know where your dollars are going, and you understand the direct impact your donation has on each intended recipient.
3. Open a donor-advised fund
If creating impact resonates with you, a donor-advised fund (DAF) may be a wonderful method to carry out your charitable intentions. Working with families of significant wealth for several years, I assist clients with the implementation of various philanthropic strategies. The DAF is my vehicle of choice for its simplicity and ease of use.
DAFs are ideal if you have not already committed a specific dollar amount to a charity in writing and you want to give substantially to more than one charity. Fidelity allows you to open a DAF for as little as $5,000. You make an initial contribution (i.e., cash, stock, or mutual fund) and invest it into one of the DAF’s pre-approved investment options. The charitable contribution is immediately deductible even if you delay a charitable grant request until the following tax year. When you are ready to distribute money to charity, contact the DAF sponsor (e.g., Fidelity in this case) and submit a grant request. You can make multiple grant requests if you wish to support multiple charities.
For example, you want to donate $5,000 each to five different charities over the next two years. You own appreciated stock valued at $25,000, and you contribute it to a donor advised fund in 2018. Your first charitable grant request is submitted in November 2018, and the other four grant requests are submitted in February 2019. Your $25,000 charitable contribution deduction applies to the 2018 tax year even though four of the charities did not technically receive the money until early 2019.
Like any investment, the value of the DAF fluctuates. Let us suppose you chose a risky investment and the account declines in value to $24,000 in February 2019. You either wait for the rebound or shortchange one of the charities and give it only $4,000. And vice versa: If your initial contribution increases to $26,000, you have an extra $1,000 to allocate. Opting for a lower-risk investment mix may be better for short-term donations. This technique and other charitable giving strategies are often best left to the oversight of a financial adviser who is skilled at guiding you through the process.
4. Carefully contemplate timing
Many donations are made in the last few weeks of the year, but the needs of a non-profit are year-round. Some non-profits promote Giving Tuesday, held the Tuesday after Thanksgiving, to spur giving outside of December. Ultimately, as the donor, you are responsible for the timing of your donation.
Instead of waiting until the last minute for your charitable contribution, think about making a one-time donation during a nontraditional time (i.e., spring or summer). If you insist on cash gifts, enroll in automatic monthly or quarterly payments to the charitable institution. This smooths cash flow for both you and the charity!
5 Stack deductions in one tax year
The Tax Cuts and Jobs Act (TCJA) has substantial implications for U.S. families, and non-profits are concerned that charitable giving will decline with the enhanced standard deduction. With proper planning, you can fulfill philanthropic goals and still receive an income tax benefit.
If you are close to the new $24,000 standard deduction threshold as a married couple (or $12,000 standard deduction as a single person), consider doubling or tripling your charitable contributions in a particular tax year. You will itemize deductions in the year you maximize charitable contributions and then resort to the standard deduction in the subsequent tax year. Donor-advised funds (DAF), illustrated above, are especially beneficial if you want to “stack” charitable donations. You take the tax deduction in the year you contribute to the DAF regardless of the date the charity receives a grant.
The age for withdrawing from retirement accounts was increased in 2020 to 72 from 70.5. The SECURE 2.0 Act, though, raised the age for RMDs to 73 for those who turned 72 in 2023. Therefore, your first RMD must be taken by April 1 of the year after which you turn 73. After that, your RMDs must be taken by December 31 of each year. Starting in 2033, though, the RMD age is increasing to 75.
Failure to meet your RMD requirement means a penalty of 25% of the not withdrawn amount of the RMD, or just 10% if the RMD is corrected within two years. Retirees may without penalty withdraw more than the RMD.
Here is the RMD table for 2024, which is based on the IRS’ Uniform Lifetime Table, which is the most widely used table below. It does go to 120 years of age. The IRS has other tables for account holders and beneficiaries of retirement funds whose spouses are much younger. Note that as of the 2023 tax year, you must be age 73 for the RMD rule to take place.
IRA Required Minimum Distributions
Age | Distribution Period in Years |
72 | 27.4 |
73 | 26.5 |
74 | 25.5 |
75 | 24.6 |
76 | 23.7 |
77 | 22.9 |
78 | 22.0 |
79 | 21.1 |
80 | 20.2 |
81 | 19.4 |
82 | 18.5 |
83 | 17.7 |
84 | 16.8 |
85 | 16.0 |
86 | 15.2 |
87 | 14.4 |
88 | 13.7 |
89 | 12.9 |
90 | 12.2 |
91 | 11.5 |
92 | 10.8 |
93 | 10.1 |
94 | 9.5 |
95 | 8.9 |
96 | 8.4 |
97 | 7.8 |
98 | 7.3 |
99 | 6.8 |
100 | 6.4 |