Frequently Asked Questions About IRAs

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Frequently Asked Questions About IRA Charitable Distributions

Support multiple nonprofits with one IRA Charitable Distribution (or Qualified Charitable Distribution) when you make a single distribution to Community First Foundation.

We’ll provide a Giving Card in the amount of your full distribution that you can use on our charitable giving website, ColoradoGives.org. Interested? Let us know by emailing cogives@communityfirstfoundation.org.

You can also support our work in the community by directing a Qualified Charitable Distribution (QCD) to Community First Foundation. As the community foundation serving Jefferson County, Colorado, we’re working toward a community where everyone is thriving. We invite you to join our efforts. Learn more about supporting our work or how we can help guide your giving by contacting us at philanthropy@communityfirstfoundation.org.

Please note that these FAQs are for informational purposes only and do not serve as tax advice or legal opinion. For such advice and opinions, please consult your qualified legal and financial advisers.

What is an IRA Charitable Distribution?

Section 401(d)(8) of the Internal Revenue Code uses the term “qualified charitable distribution” to describe money that individuals who are 70 1/2 or older can direct from their traditional IRAs to eligible charitable organizations. The provision has a cap of $100,000 per year per person. The IRA gift must be made directly from a plan administrator to an eligible charity to qualify. Traditional IRAs and some Roth IRAs qualify. Qualified retirement plans or 401(k) plans do not.

What are the tax benefits?

IRA distributions for charitable purposes are excluded from income tax. Keeping taxable income lower may reduce the impact to certain tax credits and deductions. Individuals should consult with their estate planners or tax advisors to learn about the tax implications of significant charitable gifts.

When can I make a charitable distribution?

You can make a distribution year-round, but please see deadlines and expiration dates below. More than one distribution per year is allowed (until the max of $100,000 is reached), but it is more efficient to arrange a transfer only once a year.

Deadline
The Foundation must receive your IRA Charitable Distribution by the end of the year in which you want it to qualify.

Giving Card Expiration Date
Giving Cards provided to you between January – November must be redeemed on ColoradoGives.org in the same calendar year. Distributions received in December will receive a Giving Card that can be redeemed by the end of the following calendar year.

If you do not use your Giving Card by the expiration date, the unused dollars will be redirected to Community First Foundation’s unrestricted fund and used for an area of need.

Please note that a 2% processing fee applies when donating through ColoradoGives.org.

Why would I want to give some of my IRA assets to charity?

Charitable distributions from IRAs have the power to create win/win situations for everyone. Individuals who have sufficient funds to retire comfortably can feel good about supporting the vital work of nonprofits while also reducing tax liability.

To avoid tax rates of up to 80 percent when IRA funds are left to dependents or family (other than a spouse), some financial advisors encourage individuals to distribute funds from their IRAs during their lifetimes. Under current tax law, any amounts left in an IRA when an individual passes away may be taxed as income to the beneficiary and are considered assets when calculating estate tax liability.

Will IRA charitable distributions count towards my required minimum distributions?

At age 72, the IRS requires you to take IRA withdrawals referred to as “Required Minimum Distributions” (RMDs). RMDs are subject to ordinary income taxes and more taxable income may push you into a higher tax bracket. QCDs can be counted toward satisfying your required minimum distributions (RMDs) for the year, as long as certain rules are met.

Can I also receive a charitable deduction when a distribution is made from my IRA to a charity?

No. Because you can exclude this contribution from your gross income, you cannot also take a charitable contribution deduction. To do so would result in a double benefit for donors that is prohibited. You benefit by not needing to recognize an IRA Charitable Distribution to charity as income. This document is for informational purposes only and does not serve as tax advice or legal opinion. For such advice and opinion, please consult your qualified legal and financial advisers.

Can I direct a QCD from my IRA to a donor-advised fund at Community First Foundation?

No, the IRS does not permit QCDs to a donor-advised fund. However, you can name a donor-advised fund, or another charitable fund at the Foundation, as the beneficiary of your IRA, which may allow you to accomplish your charitable legacy goals in an efficient way while saving your heirs and estate on taxes. Please reach out to us if you would like to explore this option.

What’s next?

If you are thinking about your legacy and need help exploring the options available to you, please reach out to us. By making a future charitable gift with Community First Foundation through your will, retirement plan assets, life insurance or other assets, you can continue to support the organizations that mean the most to you well after your lifetime. Our experienced staff is here to help you customize a plan that is meaningful to you.


Philanthropic Services
720.898.5900
Philanthropy@CommunityFirstFoundation.org 

Rebecca Olchawa Barker
Director of Development
720.898.5933
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