Donating Retirement Assets

Donating retirement account assets can result in greater impact for charities, and are advantageous for legacy planning.

For many people, a retirement account such as an IRA, 401(k) or 403 (b) may be a significant source of assets accumulated over a lifetime. Others may find that, due to other resources and investments, they are not in need of all the funds in their retirement accounts. Those who wish to give to charity may want to consider the benefits of donating their retirement assets.

Distributions from most retirement accounts are taxable.  However, if assets are donated directly to a qualified nonprofit, these assets usually pass to the charity tax free.  The St. Louis Community Foundation is a qualified nonprofit.

Donating to legacy funds can make good estate planning.

Assets from IRA, 401(k) and 403(b) accounts can be donated to legacy funds.  These are funds that carry on the donor’s wishes after they pass, and can be endowed.  These are Field Of Interest Funds, Designated Funds and Scholarship Funds, as well as the St. Louis Community Foundation Community Support Fund.

Some of the considerations and benefits when donating your retirement assets are:

  • Elimination of taxes on retirement account distributions.
  • Estate and income taxes may substantially diminish an inheritance from a traditional IRA, 401(k) or 403(b).
  • Retirement account income attributable to a decedent is not only included in the decedent’s estate, but often is subject to income taxes.
  • Contribute a greater amount to charities because of the elimination of income taxes on the distribution.
  • Legacy funds (Field Of Interest, Designated Funds, Scholarship Funds) ensure donor’s wishes of specific charities or causes to be supported continue to be carried out.

You can donate your IRA Required Minimum Distributions.

It is important to consult current IRS law, but in certain cases Required Minimum Distributions (RMD) can be donated directly to a qualified charity as a Qualified Charitable Distribution (QCD).  The amount of the QCD will directly reduce your Adjusted Gross Income (AGI).

Some of the conditions for donating IRA Required Minimum Distributions are:

  • Must be a Traditional IRA.
  • You must be 72 or older.
  • Donations can be made up to $100,000 annually.
  • Must be made directly to public charities, directly from the IRA custodian.
  • No goods or services can be received.

Some of the benefits of donating your Required Minimum Distributions are:

  •  Your Adjusted Gross Income (AGI) for income tax purposes is directly reduced by the amount donated to charity
  • You can donate to legacy funds such as Field of Interest Funds, Designated Funds, Scholarship Funds, or the St. Louis Community Foundation Community Support Fund, or directly to any qualified 501(c)3 organization.
  • A Qualified Charitable Deduction (QCD) reduces a donor’s AGI, regardless of whether that person itemizes deductions.