Starting at age 70½, clients (and qualified spouses) can now make a Qualified Charitable Distribution (QCD), up to $100,000 each, to eligible charities, from their traditional IRAs with no effect on taxable income.
Problem: Donor Advised Funds (DAFs) are not eligible to receive QCDs.
Solution: iGiftFund is unique among most national DAF sponsor in offering a wide range of Donor Restricted Funds (DRF) that are eligible to receive QCDs.
- Once your client reaches age 72, amounts distributed as QCDs count toward their Required Minimum Distributions (RMD).
- And you can manage investments in the client’s DRF much like you do in a DAF.
It’s a win-win-win strategy that works.
What is a Donor Restricted Fund (DRF)?
In a DRF, the donor imposes restrictions on iGiftFund at the time of the gift that specifies:
- Types of Fund restriction: Designated Fund, Scholarship Fund, Charitable Endowment Fund, Field-of-Interest Fund, Unrestricted Fund, etc.
- Charities or causes that will be supported. Designated charities cannot be changed.
- Spending policy: The formula that specifies the amount for annual grant making (some examples: $1,000 per year; an endowment distribution of 5% per year; etc.)
With a DRF, your client can:
- Create a DRF in his or her name or that of a loved one as an enduring legacy
- Take distributions from a traditional IRA that count toward RMDs (once they’re 72 years or older) with no effect on Adjusted Gross Income (AGI)
- Contribute a wide variety of asset types to the DRF
- Enjoy the best available tax benefits
- Recommend that you manage investments regardless of size, in open architecture, on your familiar investment platform
- Add to the fund as desired and/or create a new DRF next year with new beneficiaries
This information contained in this article is intended solely for educational purposes.
The content is not intended, and shall not be construed as professional advice (or a substitution for) including but not limited to legal, financial, tax or any other professional interpretation.