Planned Giving
build your

  • Support the causes you care about
  • Create a legacy to be remembered by future generations
  • Take advantage of numerous tax and financial benefits
  • Donor Advised Fund
  • IRA Charitable Rollover
  • Charitable Bequests
  • Legacy Circle
  • Text Resize
    Subsribe to RSS Feed

    Saturday May 8, 2021

    Case of the Week

    Gifts from IRAs, Part 1


    Quentin Charles Douglas was the firstborn child in a large family. Throughout his childhood, Quentin's parents worked hard to put food on the table for their children. They also instilled in Quentin the value of hard work and saving money. Quentin took those lessons to heart, putting forth his best effort in school, finding a rewarding job and putting away as much in savings as he could. For many years, Quentin worked for a company that offered a 401(k) plan. During those years, he put as much into his 401(k) as he could afford so that he could maximize the benefit of his employer's matching contributions. Eventually, Quentin moved on to other employment and made a tax-free rollover of his 401(k) into an IRA. As he approached retirement, Quentin continued to contribute to his retirement savings by maxing out his IRA contributions each year.

    With his lifelong penchant for saving money and some savvy investing, Quentin was able to retire comfortably at age 65. Now, as he approaches his 70th birthday, Quentin thinks that he will soon be taking required minimum distributions (RMD) from his IRA. Given his lifetime savings, investment income and social security distributions, Quentin does not feel as though he needs the additional income that the IRA distributions will provide – especially with the increased taxes tied to that income.


    Quentin has made numerous charitable donations throughout the years and has enjoyed the benefit of the income tax deduction from those donations. On his 70th birthday, Quentin decides that he should have a conversation with his CPA. He contemplates taking the required minimum distributions and then making a gift of those distributions to charity. That way, he surmises, he will be able to offset the taxation from his RMD with a charitable deduction. Before taking action, however, Quentin decides to call his tax advisor and asks him if this is the best course of action. Is there a better way for Quentin to accomplish his goals?


    IRA owners who reached the age of 70½ prior to 2020 were usually required to take distributions starting at age 70½. Quentin's tax advisor explains that, with the change in the tax law from the SECURE Act, Quentin is not yet required to take distributions from his IRA because he turned 70½ after January 1, 2020.

    By April of the year after the owner of a traditional IRA reaches age 72, the IRA owner will be required to take a distribution of a minimum amount from his or her IRA. All subsequent RMDs must be taken each year by December 31. The RMD is calculated by dividing the balance of the IRA at the end of the previous calendar year by the life expectancy factor of the owner. The product is the amount of the RMD that must be taken by December 31. This RMD amount is taxable as ordinary income to the IRA owner.

    If Quentin wanted to make a gift to charity now from his IRA, he could, but he would be taxed on the distribution. However, he would also receive a charitable income tax deduction. Based on his retirement income, Quentin lives comfortably, but his advisor explained he is no longer itemizing his deductions on his tax return. Quentin's advisor also noted although the SECURE Act changed the RMD rules, Quentin could wait until he reaches age 70½ and make a tax-free distribution of up to $100,000 directly to charity. Quentin understands that making a gift now from his IRA would increase his income taxes and he would be unable to take a charitable deduction because he no longer itemizes. Quentin decides to delay his contribution for another few months to be eligible to make a QCD.

    Editor's Note: For 2021, there is a temporary "above-the-line" charitable deduction of up to $300 for individual taxpayers who do not itemize.

    Published March 19, 2021
    Subsribe to RSS Feed

    Previous Articles

    Dying to Deduct, Part 3

    Dying to Deduct, Part 2

    Dying to Deduct, Part 1

    Living on the Edge, Part 6

    Living on the Edge, Part 5

  • Doris Walker
    Doris Walker
    Nature. Companionship. Service. Inspiration came in many forms for the late Doris Walker.
  • Francoise Kelz
    Francoise Kelz
    Francoise Kelz's Uncle Charlie was a waiter at the 21 Club, the famous New York City restaurant and lounge, for decades. With no children of his own, Charlie left Francoise his estate when he died.
  • Jim and Donna Neureuther
    Jim and Donna Neureuther
    One of the perks of small-town life is the tight-knit sense of community that manifests in gestures of kindness.
  • Janet Langlois
    Janet Langlois
    Janet Langlois was worried about her contractor. In the years Dave Cavagnaro had spent restoring the historic North Chatham home Jan shared with her husband, George Vollmuth, he and Jan...
  • Moe England
    Moe England
    Moe England opened three designated funds at Berkshire Taconic Community Foundation in 2014. With his daughter Elizabeth, he gives...
  • Ralph Fedele
    Ralph Fedele
    Ralph Fedele opened a legacy fund at Berkshire Taconic Community Foundation to ensure that the Irondale Schoolhouse-now enjoying a...
  • Tom Auge
    Tom Auge
    Growing up in Pittsfield, his home was always filled with relatives such as his elderly aunt May. After the death of her husband, May was...