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Helpful Hint – Encouraging Word – May 2017

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Giving Opportunity Continues in 2017 and Beyond

The “qualified charitable distribution” was made permanent by the U.S. government as of 2016. This means the giving opportunity remains a beneficial option for WELS members in 2017 and beyond. Anyone 70.5 or older can make qualified charitable distributions from their IRA of up to $100,000 per year to their church, synod, and other WELS organizations without counting the distributions as income for federal tax purposes. If a member does not itemize income tax deductions, they might consider giving to their church via this method. Due to the tax savings, they could free up money for personal needs or to expand their giving.

Interested members can learn more from your congregation’s local WELS Christian giving counselor by calling him at 800-827-5482.

You can share this information by copying and pasting this article, or find other articles at our planned giving articles archive on WELS Cloud (login required) and sort by the topic “Qualified Charitable Distribution.”

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IRA Qualified Charitable Distributions (QCDs)

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For anybody 70.5 years or older, an Individual Retirement Account (IRA) is a great option for making gifts to the Lord’s work at church, a local WELS-affiliated ministry, and/or a WELS area of ministry.

Typically IRA distributions are taxable, but, for anyone 70.5 or older, qualified distributions from an IRA to charity are free from federal and potentially state income tax. Consider directing IRA distributions to WELS to save on taxes, then using the cash you would have given for other needs. The rollover to charity counts toward satisfying the required minimum distribution for anyone 73 and older.

You and your spouse, assuming he or she is 70.5 years or older and has an IRA, may each make direct transfers of up to $105,000 per year to charity. Rather than being treated as taxable income, direct transfers to charity are wholly excluded for federal income tax purposes. These transfers do not generate a charitable deduction, but the relief from tax impact is often more advantageous. Consult your tax or financial advisor to determine the most appropriate gift assets for your situation.

You can also make a QCD of up to $53,000 (out of the annual limit) into a charitable gift annuity in one calendar year. You and your spouse can each distribute up to $53,000 from your IRAs in one year for a CGA. A CGA provides you and/or your spouse with fixed quarterly payments for life. Then, after the donor goes to heaven, the remainder of the gift goes to the ministries you choose. Consult your tax or financial advisor to determine how appropriate this option may be for you.

Contact the investment firm that handles your IRA to request a direct transfer of IRA assets to a WELS ministry. The custodian typically provides the appropriate paperwork (or you can download an authorization letter template below). To ensure that your IRA distribution is not taxable, the check must be made payable to the charity, not to you personally.

You can give to multiple WELS ministries by directing your IRA distribution to WELS Foundation. WELS Foundation will distribute funds to the ministries per your instructions and provide you with the proper gift acknowledgment letter.

If interested, talk to your financial planners and your local WELS Christian giving counselor to learn more.