Frequently Asked Questions About IRAs

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Frequently Asked Questions About IRA Charitable Distributions

You can support multiple nonprofits with one IRA Charitable Distribution when you make a single distribution to Community First Foundation. We provide a Giving eCard in the amount of your full distribution that you can use on our charitable giving website ColoradoGives.org. Here are answers to frequently asked questions about our program.

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 72 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 eCard Expiration Date
Giving eCards 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 eCard that can be redeemed by the end of the following calendar year.

If you do not use your eCard 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?

Shortly after reaching the age of 2, people are generally required to begin taking distributions from their traditional IRAs. To compute required minimum distributions, the IRS doesn’t distinguish between distributions for personal or charitable purposes. However, a distribution for personal use is taxed as income and a distribution for charity is not.

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.


Philanthropic Services
720.898.5900
Philanthropy@CommunityFirstFoundation.org 

Cheryl Haggstrom
Executive Vice President
720.898.5921
Rebecca Olchawa Barker
Director of Philanthropic Services
720.898.5933
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